01-06-2026 
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A new bill introduced in Arizona is seeking to bar the state from levying property taxes on digital asset holdings, months after a ‘crypto’ reserve bill was vetoed.
State Senator Wendy Rogers introduced SB 1044 to the Senate, aiming to amend the state’s tax code and add Section 42-11134 that exempts virtual currency from taxation. It defines virtual currency as “a digital representation of value that functions as a medium of exchange, a unit of account, and a store of value,” specifically excluding the U.S. dollar.
This tax exemption would require approval from voters in the next general election, scheduled for November 2026. If it goes to the ballot, the bill is widely expected to sail through, with Arizona being a predominantly red state. Unlike the bill she vetoed in May, Democratic Governor Katie Hobbs lacks the power to undo a bill adopted directly by voters.
Currently, Arizonans pay a flat rate of 2.5% in personal income tax for their digital assets. The state further levies a transaction privilege tax of up to 8.5%. Additionally, residents are required to pay property taxes on their assets. While the state’s tax regime is less friendly than Wyoming, Nevada or Florida, where the state governments don’t impose any taxes on digital asset gains, Arizonans pay a lower rate than some states like New York and California, which charge over 10%.
In a separate proposal, Rogers wants to amend two existing laws to limit the power that cities and counties in Arizona have over blockchain activity. Under the proposal, authorities can’t bar Arizonans from running blockchain nodes at home. They also can’t tax these nodes, with these operators now a statewide concern, not a localized sector.Arizona joins the race to become America’s most digital asset-friendly state, competing with industry leaders like Wyoming, Florida, Texas, and Colorado. New Hampshire has also become a major player, passing the first state-level ‘crypto’ reserve bill in May. A June study ranked New Hampshire top of its most ‘crypto-friendly’ states list, ahead of Wyoming and Nevada.
But while Arizona has embraced digital asset regulation, Gov. Hobbs vetoed a proposal to establish a digital asset reserve bill. The bill, also proposed by Sen. Rogers, aimed at allocating all seized digital assets to a state reserve, but Hobbs claimed it would “disincentivize local law enforcement from working with the state on digital asset forfeiture by removing seized assets from local jurisdictions.”
Watch: Culture of BSV and the ‘crypto’ economy
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