Arizona lawmakers are pushing forward a legislative effort that could exempt cryptocurrencies from property taxes, marking one of the most direct attempts by a U.S. state to formally redefine how digital assets are treated under tax law. The proposal hinges on voter approval, setting the stage for a statewide decision during the November 2026 general election.
Crypto Tax Question Heads Toward the Ballot
The Arizona Senate Finance Committee narrowly approved Senate Bill 1044 in a 4–3 vote, allowing the measure to move forward. The bill would exempt virtual currencies from property taxation, but only if voters approve a corresponding constitutional amendment later this year.
At the same time, lawmakers advanced Senate Concurrent Resolution 1003, which proposes a change to the Arizona Constitution that would explicitly exclude digital currency from the definition of taxable property. Both measures were sponsored by Wendy Rogers and now head to the Senate Rules Committee, where their constitutionality will be reviewed before further legislative action.
Because Arizona law requires voter approval for constitutional changes, SCR 1003 would appear on the 2026 ballot if it clears the legislature. Should voters approve the amendment, SB 1044 would automatically align state statutes with the new constitutional framework.
What the Exemption Would Change
Arizona already maintains a relatively low tax burden compared to other states, including a flat 2.5% personal income tax, transaction privilege taxes, and modest property taxes. The proposed exemption focuses narrowly on ad valorem taxation, clarifying that cryptocurrencies should not be treated like real estate or physical property for tax purposes.
Supporters argue that digital assets do not fit neatly into traditional property tax models, particularly given their decentralized nature and volatility. By removing crypto from property tax calculations, lawmakers say Arizona could provide greater clarity for investors, developers, and businesses operating in the state.
Blocking Local Taxes on Blockchain Nodes
The property tax exemption effort is part of a broader crypto policy push led by Rogers. In December, she also introduced Senate Bill 1045, which would prevent counties, cities, and towns from imposing taxes or fees on individuals or companies that operate blockchain nodes.
Unlike the constitutional amendment, SB 1045 would not require voter approval and could become law through the legislature alone. Advocates say the measure is designed to protect decentralized infrastructure and prevent a patchwork of local rules that could discourage innovation.
Arizona’s Mixed Crypto Record
Arizona has already taken steps to tailor its tax framework around digital assets. In 2022, the state exempted crypto airdrops from income tax by treating them as gifts at the time of receipt. It also allows gas fees to be deducted when calculating gains or losses and permits certain agencies to accept crypto payments through approved service providers.
However, the state’s crypto ambitions have repeatedly run into resistance from the governor’s office. Katie Hobbs vetoed four Bitcoin- and crypto-related bills during the 2025 legislative session, including proposals to create a state-managed Bitcoin reserve and to allow agencies to accept crypto for taxes and fines. Hobbs cited concerns over market volatility, fiscal risk, and operational uncertainty.
She has approved only two crypto-related measures so far, one allowing the state to hold abandoned digital assets under updated unclaimed property rules, and another tightening compliance requirements for crypto ATM operators.
Part of a National Tax Debate
Arizona’s proposal lands amid a broader national debate over how digital assets should be taxed. States like Florida, Texas, Wyoming, and Nevada avoid most crypto taxation by not levying personal income taxes at all, while others have pursued narrower reforms. Missouri, for example, has moved to eliminate state income tax on capital gains, while Ohio’s attempt to exempt small crypto transactions has stalled.
At the federal level, lawmakers are also preparing to revisit crypto tax policy after years of relying on IRS guidance issued in 2014. If Arizona voters ultimately approve the exemption, the state could become a key reference point in how U.S. jurisdictions modernize tax rules for digital assets.
