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US Senators to introduce tax exemption for small crypto transactions

US Senators to introduce tax exemption for small crypto transactions

Jul 27, 2022
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The Virtual Currency Tax Fairness Act aim at simplify use of digital assets for everyday purchases.

U.S. Senate Banking Committee Ranking Member Pat Toomey and Senator Kyrsten Sinema introduced a bill to exempts from taxation small personal transactions that use virtual currencies for goods and services.

The Virtual Currency Tax Fairness Act will allow Americans to use cryptocurrencies more easily as an everyday method of payment by exempting from taxes small personal transactions like buying a cup of coffee,” said Senator Toomey.

Under current law, every time a digital asset is used, a taxable event occurs. For example, if an individual uses digital assets to purchase a cup of coffee, would owe capital gains on the transaction. The Virtual Currency Tax Fairness Act would simplify the use of digital assets for everyday transactions by creating a sensible de minimis exemption for gains of less than $50 on personal transactions and for personal transactions under $50.

To protect against bad actors looking to take advantage of this exemption to evade taxes on more substantial transactions, the bill includes an aggregation rule to treat all sales or exchanges that are part of the same transaction as one sale or exchange.

The Virtual Currency Fairness Act has broad support across the cryptocurrency industry and also bipartisan support in the House, where Reps. Suzan DelBene and David Schweikert introduced a previous version of the legislation in February.

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