Only 0.0005% of the $11 billion collected in income tax in Colorado since 2022, amounting to just over $57,000, has been paid using crypto.
The State of Colorado began accepting crypto-based tax payments in September 2022, under a policy introduced by Governor Jared Polis. Yet figures shared with Colorado Newsline by the Colorado Department of Revenue reveal that only eight payments using crypto were made in 2022, amounting to a grand total of only $16,426. This rose to 22 payments and a total of $23,241 in 2023, before declining again in 2024 to $17,544, albeit across 48 payments.
“Colorado was the first state to innovate and accept cryptocurrency as payment for state taxes under the leadership of Governor Jared Polis,” said Elizabeth Kosar, director of communications of the Colorado Department of Revenue, speaking to Colorado Newsline. Kosar also clarified that, strictly speaking, Colorado doesn’t actually receive any crypto, with taxpayers using PayPal Cryptocurrencies Hub to convert their digital assets into U.S. dollars at the point of payment.
Such information may potentially undermine any notion that cryptocurrency usage for payments is significant in the United States, although research on ownership suggests that 20% of American voters have owned or used crypto at some point. And Bitcoin supporters aren’t surprised that very few Coloradan residents have taken the opportunity to use crypto to pay tax, given that established tokens such as Bitcoin serve more as stores of value than mediums of exchange.
“As Michael Saylor says, the one rule of Bitcoin, is to NEVER sell (or spend) your Bitcoin,” Lou Kerner, founder of Web3 live events community CryptoMondays, told Decrypt. Since September 2022 the price of Bitcoin has risen by around 320%, with the cryptocurrency also registering positive annual returns in September 2023 (30%) and September 2024 (125%).
Utah is currently the only other U.S. state to accept cryptocurrency payments for tax purposes, although Louisiana accepts crypto as payment for various services and fines. The city of Detroit will also begin accepting digital asset payments for tax from the middle of this year, using the same PayPal conversion service in operation in Colorado and Utah (whereas Louisiana harnesses Bead Pay).
Given that cryptocurrency ownership has been rising worldwide over the past few years, there may be an expectation that more states and more nations will begin accepting tax payments via crypto. Yet commentators such as Kerner are skeptical that a significant percentage of crypto-based tax payments will ever involve store-of-value tokens such as Bitcoin. “Over time, stablecoins will emerge as the primary way people transact,” he said. “It’s just more efficient for everyone.”