Ohio House Passes Bill Exempting Crypto Transactions Under $200 From Tax

The Ohio House of Representatives has made a significant move towards easing the tax burden on small cryptocurrency transactions by passing House Bill 116 (HB 116). Introduced by State Representative Steve Demetriou, this bill aims to create a more favorable environment for cryptocurrency users and potentially the mining industry within Ohio. The bill received unanimous bipartisan support from the House Technology and Innovation Committee, indicating a shared interest in addressing how crypto interacts with existing state frameworks, particularly concerning taxation and economic activity like mining.

Now that the House has approved the bill, it moves to the Ohio Senate for further consideration. If it successfully navigates the Senate and passes there, the final step would be gaining the signature of Republican Governor Mike DeWine to become law. The most notable aspect of HB 116 is its provision for a crypto tax exemption on smaller transactions. Specifically, the bill proposes exempting crypto transactions below $200 from state capital gains tax. This exemption is significant for anyone using cryptocurrency for everyday purchases or minor exchanges.

Currently, selling or exchanging cryptocurrency is often considered a taxable event under existing tax laws. This applies even if you’re just using crypto to buy a small item. The $200 threshold is designed to make using crypto for small, routine purchases much simpler from a tax perspective. Tracking capital gains and losses on numerous small crypto transactions can be a significant headache for individuals. This exemption would dramatically reduce the record-keeping burden for users who aren’t engaging in large-scale trading but rather using crypto for utility.

To understand the impact of HB 116, it’s helpful to quickly review what crypto capital gains tax entails. When you acquire cryptocurrency, that’s your cost basis. If you later sell, trade, or use that crypto to buy something for more than your cost basis, you realize a capital gain. This gain is subject to taxation. Under HB 116, if that transaction value was below $200, the capital gain associated with it would potentially be exempt from Ohio’s state capital gains tax. This doesn’t eliminate the federal tax obligation, but it removes a layer of state-level complexity and cost for small disposals.

It’s crucial to remember that the proposed exemption only applies to crypto transactions valued below $200. Any transaction exceeding this threshold would still be subject to Ohio’s standard capital gains tax rules. The bill also reportedly includes provisions related to crypto mining operations. While the specific details of these provisions weren’t extensively covered in the initial report, such inclusions often address regulatory clarity, energy consumption considerations, or potential tax incentives or frameworks for mining businesses operating within the state. This suggests a broader effort by Ohio lawmakers to consider various facets of the cryptocurrency ecosystem, not just individual user transactions.

The journey for the Ohio crypto tax bill, HB 116, is not yet complete. Its passage through the House is a significant hurdle cleared, demonstrating legislative will, but it now faces review and potential amendments in the Ohio Senate. The Senate may hold committee hearings, propose changes, and then vote on the bill. If it passes the Senate, it must then be signed into law by Governor DeWine. The process can take time, and there’s no guarantee the bill will pass the Senate or be signed by the Governor. However, the strong bipartisan support in the House suggests it has a reasonable chance of progressing.

If you are an Ohio resident who uses or holds cryptocurrency, here are some actionable steps: Stay informed about the progress of HB 116 through the Ohio Senate. Understand the current state and federal tax rules regarding crypto capital gains. Keep meticulous records of your crypto purchases and sales. Prepare for potential change by familiarizing yourself with the specifics of the $200 exemption and how it applies to your transactions. Consider advocacy by contacting your State Senator to express your views if you feel strongly about the bill.

The passage of Ohio House Bill 116 through the House is undoubtedly a positive signal for those hoping to see clearer and potentially less burdensome regulations for cryptocurrency users at the state level. The proposed crypto tax exemption for transactions under $200 is a practical step that could make using crypto for small, everyday purposes much more feasible and less taxing for Ohio residents. While the bill still has hurdles to clear in the Senate and with the Governor, its initial success with bipartisan support highlights a growing recognition among lawmakers of cryptocurrency’s role in the modern economy and the need for updated regulations. This move positions Ohio as a state potentially open to fostering crypto adoption by addressing one of the key pain points for users: tax complexity on small crypto transactions.