Rhode Island Bill Would Allow State Residents Spend $10,000 Monthly In Bitcoin Tax Free
Bill S. 0451, which was introduced to the Rhode Island Senate last month, permits the state’s residents and businesses to make up to 10 payments in bitcoin valued at less than $1,000 per month (or sell the equivalent amount) without being subject to state capital gains taxes.
Amendment to State Income Tax Laws
The bill is an amendment to existing state income tax laws, and the exact language in the proposed legislation is as follows:
“Any sale of bitcoin by an individual or business in Rhode Island shall be exempt from state taxation if the total value of sales is less than one thousand dollars ($1,000) per diem. The limit of the state tax exempt bitcoin transaction shall not exceed ten (10) sales per a thirty (30) day cycle.”
The bill defines a “sale of bitcoin” as “any transaction in which bitcoin is sold or exchanged for another form of value, such as fiat currency or other physical or digital assets.”
This exemption only applies at the state level and does not affect federal tax obligations.
Recordkeeping Requirements
Under the bill, individuals and businesses engaging in tax-exempt bitcoin transactions are responsible for keeping records of these transactions, including the total value of sales per day. These records may need to be provided to the Rhode Island’s department of revenue for audit or compliance purposes.
Potential Economic Benefits
In a slide deck prepared by the Rhode Island Blockchain Council, Chris Perota, Chairman of the Council, highlighted that the passing of Bill S. 0451 would help reduce friction for digital asset payments.
Perota emphasized that “current tax implications of spending BTC hamper its utility for Rhode Island citizens and stifle economic activity.” He also suggested that small businesses accepting bitcoin for products and services could stimulate economic growth in the state.
National Context
As of now, no other U.S. states have introduced comparable bills. At the federal level, the Lummis-Gillibrand “Responsible Financial Innovation Act” is the only bill that has proposed a similar de minimus tax exemption on bitcoin transactions valued up to $200.
This article was first published on Bitcoin Magazine and is authored by Frank Corva.