Arizona Files New Legislation to Remove Crypto From State and Local Taxes

• Arizona lawmaker advances bills to limit taxes on digital assets statewide.
• Two proposals require voter approval during the November 2026 general election.
• One bill blocks cities from taxing blockchain node operations.
• Arizona joins widening national divide over crypto tax policy.

Arizona lawmakers are currently reviewing some new proposals, which could mean changes in how digital assets are taxed and regulated. Two pieces of legislation and one constitutional resolution, all of which are intended to limit the tax burden on holders of cryptocurrency as well as operators of blockchain infrastructure, have been prefiled in the state’s Senate on Friday.

The bills cover virtual currency taxation, the powers of local units of government, and constitutional interpretations of taxable property. Taken together, these bills indicate a collective attempt to make the state of Arizona a favorable place for crypto-related activity while minimizing uncertainties related to governance and regulatory frameworks. These bills would need different approvals before coming into effect.

Also Read: Bitcoin Reserve Race Heats Up: Texas Joins After Arizona’s Move

Arizona Bills Seek Voter Approval to End Crypto Taxes

Senate Bill 1044 aims to modify the Arizona state laws to include an exemption for taxation on virtual currency. This bill exempts digital assets from taxable classes of property. In that it affects taxation, this bill has to be approved by the voters in the November 2026 General Election.

Another similar bill, Senate Concurrent Resolution 1003, pursues a constitutional path. SCR 1003 proposes to amend the Arizona State constitution to make clear that virtual currency falls outside the definition for property taxes. Like SB 1044, this measure will also go before Arizona voters during the November 2026 election. Its provisions will not go into effect before the certification of the election results.

Supporters of the bills pointed out that the two measures would give clarity in the long run. They intend to harmonize the language used in the law and definitions found in the constitution. Arizona also has its own unique system in place, whereby it can take custody of the digital assets if they are abandoned for at least three years, thanks to an earlier move that wanted to create a reserve for digital assets.

Arizona Bill Blocks Local Taxes on Blockchain Nodes

The third proposed bill, Senate Bill 1045, is concerned with blockchain technology infrastructure. This bill proposed that counties, cities, and towns be prohibited from collecting any tax, fee, or fine from individuals or organizations that maintain blockchain nodes. Blockchain nodes validate and process blockchain transactions.

In contrast to the tax exemption rules, SB 1045 does not require voter approval. It had the potential to move within the state legislature alone. This bill aims to avoid piecemeal local regulations, which could act as deterrents to blockchain involvement.

The Arizona bills come amid a variety of approaches by states. Arizona is one of just a few states that offer digital asset reserve legislation, alongside New Hampshire and Texas. In other states, lawmakers in Ohio introduced a bill that exempts crypto transactions below $200 from the capital gains tax, though this bill has stalled since June. 

In New York, a bill that imposes a 0.2% excise tax on digital asset transactions has also stalled in committee. At the national level, a proposed bill introduced a $300 exemption for small gains from digital assets.

Also Read: Arizona Governor Shuts Down Crypto Bills, But One Quietly Gets Through