Arizona legislature Moves to Exempt Virtual Currency From Property Taxes

Senate Bill 1044 (SB 1044) seeks to amend the Arizona Revised Statutes to exempt virtual currency from property taxation under state law. If enacted, the measure would reshape how digital assets are classified for tax purposes in Arizona, removing them from a framework traditionally applied to physical and business property.

The bill, sponsored by Republican State Senator Wendy Rogers, has been prefiled for the 2026 legislative session and has not yet been considered by either chamber. SB 1044 would establish a new statutory section that explicitly excludes virtual currency from property tax assessments, setting it apart from assets such as real estate, machinery, or equipment that are routinely subject to valuation and taxation.

Although the full bill text has not yet been released in its final form, legislative tracking platforms indicate that the proposal’s core aim is to formally define virtual currency and place it outside the scope of property tax liability. Virtual currency is generally understood as a digital representation of value that can function as a medium of exchange, a unit of account, and a store of value. In practical terms, the exemption would mean that Arizona residents and businesses holding cryptocurrencies such as Bitcoin or Ethereum would not have those holdings taxed as property at the state or local level.

Tax policy specialists often point to property tax exemptions as a tool that can influence investment decisions and shape broader economic behaviour. Under traditional property tax systems, tangible assets are typically assessed annually based on their fair market value. Digital assets, however, have long existed in a grey area, with states taking varied approaches to classification and taxation, most often defaulting to income tax treatment rather than property-based assessments.

Against that backdrop, Arizona’s proposed exemption stands out. By removing virtual currency from the property tax framework, the bill would eliminate a potential point of friction for digital asset holders and could make the state more appealing to investors and businesses seeking tax-efficient environments.

Arizona has already built a track record as an early mover on digital asset policy. Over the past several years, the state has passed legislation aimed at modernising how blockchain technology and cryptocurrencies are recognised in law. Earlier in 2025, lawmakers approved House Bill 2749, which updated Arizona’s unclaimed property rules to account for digital assets and created a Bitcoin and Digital Assets Reserve Fund designed to preserve the value of abandoned crypto holdings before liquidation.

Those changes were intended to protect owners from value loss when unclaimed assets are sold during market downturns, while also allowing the state to capture staking rewards or airdropped tokens before any eventual sale. Together, the measures signalled a more nuanced approach to digital asset management within state government.

SB 1044 would take that approach a step further by extending Arizona’s digital asset framework beyond unclaimed property and into the realm of tax classification. If passed, the bill would align with a broader national conversation about how to integrate blockchain-based financial products into existing tax systems without discouraging innovation or investment.

Senator Rogers, the bill’s sponsor, is known for her conservative fiscal views and has previously supported policies aimed at lowering tax burdens and reducing regulatory constraints on emerging technologies. SB 1044 fits squarely within that policy outlook. Before it can become law, the bill must advance through committee in the Arizona Senate, pass both legislative chambers, and be signed by the governor. No hearings or votes have yet been scheduled.

If enacted, SB 1044 would mark a meaningful shift in how Arizona treats virtual currency for tax purposes. By proposing to exempt digital assets from property taxation, the state would further position itself at the forefront of efforts to modernise legal and fiscal frameworks around blockchain technology.

As the legislation moves forward, its potential economic and legal implications are likely to draw close attention from taxpayers, digital asset firms, and policy analysts. The bill may signal growing acceptance of digital currencies within mainstream fiscal policy, even as debates continue over how best to balance innovation with fair and sustainable tax systems.