Will Colorado accept Bitcoin and cryptocurrency for tax-related purposes?

Governor Jared Polis expects his state to accept bitcoin and cryptocurrency for tax-related purposes by the summer. Colorado will soon start accepting bitcoin as payment for taxes, Governor Jared Polis said in a Tuesday interview with CNBC. “We expect to accept crypto by this summer” for all of the state’s tax-related purposes, Polis said.

Can you pay for Your Driver's License with Bitcoin in Colorado?

Polis added that Colorado plans on enabling bitcoin and cryptocurrency payments for other state-related fees in the months following the taxes roll out. Soon enough, a Colorado resident might be able to pay for their driver’s license with bitcoin.

How is bitcoin taxed in the US?

U.S. taxpayers must report Bitcoin transactions for tax purposes. Retail transactions using Bitcoin, such as purchase or sale of goods, incur capital gains tax. Bitcoin mining businesses are subject to capital gains tax and can make business deductions for their equipment. Bitcoin hard forks and airdrops are taxed at ordinary income tax rates.

Do you have to pay capital gains tax on Bitcoin?

The IRS treats Bitcoin like a capital asset, which means you may have to pay capital gains taxes on bitcoin transactions, whether selling it or making purchases. For most individuals, the capital gains tax rate for bitcoin held for at least a year is between 0% and 20%.