Jack Dorsey sends strong message on crypto tax

Core Viewpoint - Jack Dorsey, co-founder of Twitter (now X), advocates for a de minimis tax exemption for Bitcoin transactions in the U.S. to simplify tax reporting for low-value transactions [1][2]. Tax Structure for Digital Assets - The IRS classifies digital assets as property, requiring capital gains reporting for every transaction, including small purchases [1][3]. - Short-term capital gains are taxed at income rates between 10% and 37%, while long-term gains are taxed at lower rates of 0%, 15%, or 20% based on income [3]. - Crypto earned through staking, mining, or airdrops is taxed as regular income upon receipt [4]. State Tax Variations - States like California, New York, and Hawaii impose high crypto taxes, with combined rates exceeding 10% for top earners [5]. - Conversely, states such as Florida, Texas, Wyoming, Nevada, and South Dakota have no state income tax, benefiting crypto traders [5]. - Washington State applies a 7% excise tax on long-term capital gains over $250,000, including crypto, despite lacking an income tax [5]. Dorsey's Broader Vision for Bitcoin - Dorsey believes Bitcoin can function as both a store of value and a medium of exchange, and his company Block Inc. has introduced tools for small businesses to accept Bitcoin payments without fees until 2026 [6]. Current Market Context - Bitcoin recently fell below key support levels, trading at $121,025, down 1%, influenced by a stronger dollar and cautious investor sentiment ahead of remarks from Federal Reserve Chair Jerome Powell [7][8].