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

key takeaways

  • 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:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

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.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens