Senator Lummis Introduces Crypto Tax Bill With $5,000 Annual Exemption

U.S. Senator Cynthia Lummis introduced a standalone draft bill on Thursday aimed at modernizing the tax code for digital assets, just days after lawmakers passed a federal spending bill with no mention of crypto. The Wyoming Republican’s proposal includes a de minimis exemption for crypto transactions and capital gains under $300, with an annual cap of $5,000. It would also defer taxes on mining and staking rewards until the assets are sold—rather than when they’re earned—and exempt crypto lending agreements and charitable contributions made in digital assets from taxation.

“This groundbreaking legislation is fully paid for, cuts through bureaucratic red tape, and establishes common-sense rules that reflect how digital technologies function in the real world,” Lummis said in a statement. “We cannot allow our archaic tax policies to stifle American innovation.”

The bill comes as digital asset advocates grow increasingly frustrated by what they see as a lack of clear and fair tax treatment in the U.S. The IRS currently treats most crypto events as taxable, even for everyday use cases, such as buying coffee with bitcoin. Industry voices have long pushed for a de minimis exemption to avoid punishing small, routine transactions. Lummis’ bill appears to answer that call—at least partly—by allowing up to $5,000 annually in untaxed crypto gains under specific thresholds.

The move follows mounting pressure on lawmakers to address crypto taxation amid broader regulatory uncertainty. In June, House lawmakers introduced changes to the Digital Asset Market Clarity Act of 2025 that would exempt developers of decentralized protocols from being classified as money transmitters—reducing their tax and compliance burden compared to centralized platforms. While the spending bill passed Congress this week without crypto language, lawmakers are reportedly scrambling to fold in last-minute provisions before it reaches President Donald Trump’s desk.

Lummis, a long-time crypto ally, now sees her standalone bill as the clearest path forward. It came barely six months after the U.S. House of Representatives voted 292-132 to overturn an IRS rule requiring crypto platforms, including decentralized finance (DeFi) entities, to collect and report taxpayer and transaction data. Texas Democrat Lloyd Doggett warned that overturning the rule could benefit tax evaders and criminal networks, which could increase the national debt by $4 billion. The IRS argued that these measures are consistent with existing broker regulations and are not intended to discriminate against the DeFi industry.

Senator Cynthia Lummis, a Republican from Wyoming, has introduced a new crypto tax bill following the removal of her amendments from the recent budget package. The proposal includes a de minimis exemption for crypto transactions and capital gains under $300, with an annual cap of $5,000. This move comes after Lummis' previous attempts to include crypto-friendly provisions in the budget were not successful. Lummis has been a vocal advocate for clearer regulations and fairer tax treatment for digital assets, stating that it is time to stop the unfair tax treatment and ensure that the U.S. remains a leader in the crypto space.

The new bill aims to provide some regulatory relief for digital assets, which were notably absent in the recent Senate text. Lummis' earlier amendment, which sought to defer tax on staking and mining, was not included in the final budget package. The senator's push for crypto tax reform is part of a broader effort to create a more favorable environment for digital assets in the U.S. Lummis' proposal includes measures to eliminate double taxation and simplify capital gains tracking, which could make crypto investments more accessible and attractive to a wider range of investors.

The introduction of this new bill highlights the ongoing debate within the U.S. government regarding the regulation and taxation of digital assets. While some lawmakers, like Lummis, advocate for a more crypto-friendly approach, others remain cautious about the potential risks and challenges posed by digital currencies. The outcome of this debate will have significant implications for the future of crypto in the U.S. and its role in the global financial system. As the discussion continues, it is clear that the U.S. government is grappling with how to best address the complexities of digital assets while balancing the need for regulation and innovation.