Arizona Senator Wendy Rogers introduced SB 1044 to amend the state tax code and create Section 42-11134, exempting virtual currency from taxation. The bill 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, explicitly excluding the U.S. dollar. This exemption would require approval by voters in the next general election, scheduled for November 2026. If placed on the ballot, observers expect broad support in Arizona, a predominantly red state.
Governor Katie Hobbs cannot veto a measure that voters pass directly. Currently, Arizonans pay a flat 2.5% personal income tax on digital assets, a transaction privilege tax of up to 8.5%, and property taxes on these holdings. 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, including allowing residents to run blockchain nodes at home and barring local taxes on those nodes, with oversight shifted to a statewide framework.
Arizona is positioning itself among states viewed as crypto-friendly, alongside Wyoming, Florida, Texas, and Colorado. New Hampshire has also become a major player, passing the first state-level crypto reserve bill in May, and a June study ranked New Hampshire top of its crypto-friendly states list, ahead of Wyoming and Nevada. Hobbs vetoed a Rogers-proposed digital asset reserve bill, which sought to allocate seized digital assets to a state reserve but faced concerns it would disincentivize local law enforcement from working with the state on digital asset forfeiture.
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