Colorado Residents Can Now Pay State Taxes With Crypto, for a Fee


  • Colorado allows for cryptocurrency tax payments, and they cost less than credit card transactions
  • Taxpayers may be subject to additional taxes down the line

Colorado residents can now pay state taxes via cryptocurrencycurrency, a move Gov. Jared Polis said carries lower fees than credit card payments. 

Colorado is partnering with PayPal’s cryptocurrencycurrency arm on the endeavor. The service fee for such transactions is $1.00, plus 1.83% of the total, according to the state’s Department of Revenue

Taxpayers opting to use direct debit are not subject to fees. Credit card payments impose a $0.75 fee, plus 2.25% of the net payment. 

Residents can — for the first time — pay individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax using cryptocurrencycurrency. 

Transactions can only be completed through PayPal personal accounts, as opposed to PayPal business accounts, and payments must be made in full using only one cryptocurrencycurrency, the Department of Revenue said. 

“We are touting Colorado as the center of the cryptocurrency economy,” Polis said in an interview ahead of the ETHDenver conference conference in February. “We have not only very favorable laws and rules, but we also have a great ecosystem of innovation here.”

The Department of Revenue’s website did not list specific acceptable cryptocurrencycurrencies, but PayPal supports bitcrypto-coin, bitcrypto-coin cash, ether and litecrypto-coin. 

“Our budget is still in dollars, our expenditures are still in dollars, and, of course, we don’t want to take the speculative risk of holding cryptocurrency, so we will be having a transactional layer there,” Polis said. “It will be entering our systems as dollars. For consumer convenience, we want to accept payments in a wide variety of cryptocurrencycurrencies.” 

Taxpayers opting to use cryptocurrencys should expect additional fees down the line. They will be responsible for keeping track of these transactions and determining tax obligations, legal experts said.

“Colorado’s plan to accept cryptocurrency currency for state tax payments and other government fees is proof of cryptocurrency’s wide acceptance as both an investment and payment method,” Kell Canty, CEO of Ledgible, said, at the time of the initial plan announcement. “Of course, using cryptocurrency to pay taxes does not change the tax treatment of the transaction for federal income or state income tax purposes.”


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  • Casey Wagner

    Blockworks

    Senior Reporter

    Casey Wagner is a New York-based business journalist covering regulation, legislation, digital asset investment firms, market structure, central banks and governments, and CBDCs. Prior to joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a degree in Media Studies.

    Contact Casey via email at [email protected]



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