U.S. Senator Proposes Tax Relief for Small Crypto Transactions in 2025 Budget Bill to Boost Adoption

The amendment seeks to waive taxes on crypto transactions under $300, with an annual cap of $5,000 in total transactions, to simplify tax reporting for casual crypto users and encourage broader adoption.

Currently, many crypto users face complex tax rules that tax staking rewards and mining proceeds twice: once when the asset is received and again when sold. Lummis’ amendment aims to tax these rewards only upon sale, aligning tax treatment with actual income and removing what the industry calls an unfair double taxation. This change would also apply to assets gained from airdrops and forks.

The amendment addresses other tax issues, including crypto lending, wash sales, and charitable contributions. Specifically, it targets the wash trading loophole, where investors sell assets at a loss and quickly repurchase them to harvest tax losses—a practice that lawmakers have long sought to curb.

This proposal is part of a broader effort to modernize crypto tax policy within the “Big Beautiful Bill,” which supports much of President Donald Trump’s agenda. The bill is currently undergoing a “vote-a-rama” in the Senate, a process that allows for unlimited amendments. However, the bill faces opposition from Democrats over concerns about Medicaid cuts and environmental policies, and it risks adding over $3 trillion to the U.S. deficit.

Industry groups, such as the Digital Chamber, have praised the amendment as a correction of a long-standing tax mistake, arguing that it will help position the U.S. as a global leader in cryptocurrency innovation.

The amendment has not yet been voted on, and if passed in the Senate, the House of Representatives will need to approve the revised bill. The outcome will have a significant impact on the future tax landscape for crypto users in the U.S.