Arizona Proposes Legislation to Centralize Cryptocurrency Tax Policy and Ban Local Crypto Taxes
State Senator Wendy Rogers has introduced three legislative measures aimed at reshaping cryptocurrency tax policy in Arizona. The bills include SB 1044, which proposes a virtual currency tax exemption; SB 1045, which seeks to bar local governments from imposing taxes or fees on blockchain nodes; and SCR 1003, a constitutional amendment intended to exclude virtual currency from property tax.
While SB 1045 could become effective through the state legislature alone, the broader tax exemption proposals would require voter approval during the November 2026 general election. These measures would centralize cryptocurrency tax policy at the state level and protect local governments from taxing blockchain infrastructure and node operators.
Currently, Arizona enforces a 2.5% flat income tax, while the Transaction Privilege Tax starts at 5.6%, with local rates exceeding 8.5%. Property taxes also exist. For tax purposes, Arizona treats cryptocurrency as property, and since December 2022, crypto airdrops are exempt from state income tax when received as gifts, although federal taxes still apply.
In addition to the tax proposals, Arizona already has a law allowing the government to claim ownership of digital assets deemed abandoned after three years, establishing a state digital asset reserve. Previously, Wendy Rogers co-sponsored a Bitcoin reserve bill that Governor Katie Hobbs vetoed in May 2025. However, in June 2025, the Arizona Senate passed a revised Bitcoin reserve bill 16–14 following reconsideration.
The discussion around cryptocurrency taxation is part of a broader national debate. Several states like Florida, Texas, Wyoming, and Nevada have no personal income tax, and there are ongoing federal efforts to modernize digital asset taxation.
