Key Highlights
- Senator Cynthia Lummis revealed that senators are working on legislation to abolish the tax on small Bitcoin transactions
- The legislation is expected to fix a major pain point by ensuring that individuals who earn Bitcoin through mining are only taxed when they sell it
- Senator Lummis also stated that Bitcoin is the only solution to solving America’s $36 trillion national debt
Senator Cynthia Lummis of Wyoming, a well-known supporter of Bitcoin, is fighting to create new tax rules for digital currencies. Today, she revealed that the senator is working on a regulatory framework to eliminate tax on small Bitcoin transactions.
🇺🇸 SENATOR LUMMIS JUST SAID THE SENATE IS WORKING TO ABOLISH TAXES ON SMALL #BITCOIN TRANSACTIONS
IT’S HAPPENING!!! pic.twitter.com/sjK7mp3xAg
— Vivek Sen (@Vivek4real_) September 30, 2025
Senators’ main goal is to eliminate taxes on small, everyday purchases made with Bitcoin. She believes that this decision is crucial for American innovation. It could even play a role in tackling the nation’s massive $36 trillion debt.
A Tax on Every Tiny Bitcoin Transaction
Under current U.S. law, the IRS treats Bitcoin and other cryptocurrencies as property, not like the dollars in your bank account. This means that every time you use Bitcoin to buy something, it is considered a “taxable event.”
You must calculate whether you made a profit or a loss on the Bitcoin you spent from the moment you acquired it.
For example, if you bought $50 of Bitcoin and later used it to buy a $60 video game, you technically have a $10 gain that you must report and pay taxes on.
Tracking these tiny gains for dozens of small purchases is a complex and unrealistic burden for most people. It has effectively stopped Bitcoin from being used as a regular currency for daily life.
The Lummis Solution: A “De Minimis” Exemption
To fix this, Senator Lummis introduced new legislation in July. The core of her bill is a “de minimis” exemption, which is a legal term for ignoring small amounts.
Her plan would create an exemption for the first $300 of any Bitcoin transaction. If the purchase is under $300, you would not have to calculate or pay any taxes on it. There would be an annual cap of $5,000 on these exempted transactions. This would cover things like buying groceries, paying for a meal, or fueling up your car without creating a tax nightmare.
U.S. government cannot allow our archaic tax policies to stifle American innovation, Senator Lummis stated on the social media platform X.
The bill also addresses other major issues in the crypto world. It aims to end “double taxation” for people who mine Bitcoin, ensuring they are only taxed when they sell their rewards, not when they first receive them.
It would also introduce rules to prevent people from artificially claiming losses, similar to rules that have long existed for stock market investors.
Bitcoin and the National Debt
Earlier this year, she reintroduced the BITCOIN Act. This proposal would direct the U.S. Treasury to buy one million Bitcoins over the next five years, creating a “Strategic Bitcoin Reserve.” The idea is that, just like the country holds strategic reserves of oil, it should hold Bitcoin.
The theory is that as Bitcoin’s value grows over time, the government could eventually sell a portion of its holdings to pay down the national debt. Supporters of the plan, including financial firms like VanEck, have published models suggesting such a reserve could potentially cut the national debt by tens of trillions of dollars over two decades.
However, officials at the Treasury have warned about Bitcoin’s famous price volatility. They argue it is too risky for government reserves. Others believe the debt should be addressed through spending cuts or tax reforms, not by investing in a speculative asset.
Senator Lummis’s tax bill is currently seeking support from both Democratic and Republican colleagues. It faces a long legislative process before it can become law. Meanwhile, the legislative efforts for a Bitcoin reserve are part of a larger national conversation about the future of money.
