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

Citizens can pay individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax using cryptocurrency

article-image

Source: Shutterstock

share
  • Colorado allows for crypto 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 cryptocurrency, a move Gov. Jared Polis said carries lower fees than credit card payments. 

Colorado is partnering with PayPal’s cryptocurrency 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 cryptocurrency. 

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 cryptocurrency, the Department of Revenue said. 

“We are touting Colorado as the center of the crypto 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 cryptocurrencies, but PayPal supports bitcoin, bitcoin cash, ether and litecoin. 

“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 crypto, 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 cryptocurrencies.” 

Taxpayers opting to use cryptos 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 crypto currency for state tax payments and other government fees is proof of crypto’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 crypto to pay taxes does not change the tax treatment of the transaction for federal income or state income tax purposes.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (1).png

Research

Aave’s revenues have doubled from April lows and are fast approaching all-time highs. With 35% of borrow interest coming from ETH and 55% from stablecoins, Aave is emerging as a powerful proxy as an ETH and stablecoin beta. As looping strategies accelerate growth and Horizon positions the protocol to ride the RWA wave, Aave is shaping up as one of DeFi’s most compelling multi-narrative plays.

article-image

The firm secured $200M in commitments to build Asia’s largest institutional Bitcoin treasury fund within six months

by Blockworks /
article-image

In markets, overconfidence is both feature and bug

article-image

Season One of the DeFi Renaissance Incentive Program (DRIP) will distribute up to 24 million ARB to users

article-image

Ahead of the FOMC September meeting, the labor market continues to embolden a dovish lean

article-image

A TradFi veteran could be Solana’s best bet at finding its own Michael Saylor

article-image

The crypto infrastructure firm expands into payments with a stablecoin network connecting fintechs, banks, and issuers

by Blockworks /