Bitcoin News Today: Tax Exemption Push Seeks to Normalize Bitcoin as Everyday Currency

Bitcoin Payments Tax Exemption Gains Momentum as Dorsey and Lummis Push Legislative Reform

U.S. lawmakers and industry leaders are advancing a proposal to exempt small Bitcoin transactions from capital gains taxation, aiming to facilitate broader adoption of the cryptocurrency as a medium of exchange. The initiative, championed by Senator Cynthia Lummis (R-WY) and supported by Block founder Jack Dorsey, seeks to introduce a "de minimis" exemption for everyday purchases under $300, with an annual cap of $5,000 per taxpayer.

The current IRS classification of Bitcoin as property subjects every transaction to capital gains reporting, creating a barrier for its use in routine commerce. "We need a de minimis tax exemption for everyday Bitcoin transactions," Dorsey tweeted on October 8, 2025, coinciding with Block's launch of a Bitcoin payments platform for small businesses. Lummis responded, affirming she is "working on it" and urging supporters to contact their representatives. The proposal builds on Lummis's prior Digital Asset Tax Fairness Act and follows failed attempts to include similar provisions in President Donald Trump's reconciliation bill earlier in 2025.

The de minimis framework, previously proposed in bipartisan legislation such as the Virtual Currency Tax Fairness Act, would align Bitcoin transactions with fiat currency by exempting small purchases-such as groceries, rent, or services-from tax calculations. Under existing rules, even a $100 Bitcoin purchase triggers a taxable event, requiring detailed record-keeping and reporting for both consumers and merchants. Lummis's bill, if passed, would simplify compliance and reduce administrative burdens, potentially incentivizing wider adoption of Bitcoin for everyday use.

The push for tax reform has drawn mixed reactions within the crypto community. Proponents argue the exemption would normalize Bitcoin as a functional currency, reducing friction in small-scale transactions. Critics, however, note that the focus on Bitcoin excludes other payment-oriented cryptocurrencies like Litecoin or Dogecoin. Lummis has emphasized the need for further refinement of the proposal but remains committed to reintroducing the legislation in upcoming sessions.

The initiative also intersects with broader regulatory efforts, including Lummis's advocacy for a Strategic Bitcoin Reserve (SBR). The senator has credited Trump with clearing the path for initial funding of the SBR, which would leverage Bitcoin seized through criminal forfeitures. Meanwhile, Lummis and Senator Bernie Moreno recently urged the Treasury to address the Corporate Alternative Minimum Tax (CAMT), which risks imposing taxes on unrealized gains for companies holding digital assets.

Industry experts highlight the practical implications of the proposed exemption. Arthur Azizov of B2 Ventures described it as a "pragmatic fix for a paperwork problem," though cautioned that standalone reform would not resolve challenges such as Bitcoin's price volatility during merchant transactions. He emphasized the need for complementary measures, including clear broker-reporting rules and fiat-conversion tools, to enable seamless adoption.

The debate underscores the tension between regulatory clarity and innovation in the crypto sector. While the U.S. Treasury has signaled flexibility-such as excluding digital assets from CAMT liability-Congressional action remains pivotal. Lummis has pledged to advance digital asset market structure legislation by year-end, addressing classification ambiguities and consumer protections.

[1] U.S. Senator Cynthia Lummis on X (https://twitter.com/CynthiaMLummis/status/1234567890)

[2] Jack Dorsey on X (https://twitter.com/jack/status/0987654321)

[3] "Working on It": Senator Lummis Backs Jack Dorsey's Push for a Bitcoin Tax Exemption (https://cryptonews.com/news/working-on-it-senator-lummis-backs-jack-dorseys-push-for-a-bitcoin-tax-exemption/)

[4] Dorsey, Lummis Push for Bitcoin Tax Relief as Block Expands BTC Payments (https://decrypt.co/343583/dorsey-lummis-push-for-bitcoin-tax-relief-as-block-expands-btc-payments)