How is crypto taxed in Arizona?

Arizona crypto tax follows the federal treatment of crypto as property and then applies the state's flat income tax. Selling, swapping or spending crypto can create a gain, and crypto received as pay or rewards is income. Arizona adds a few crypto-specific adjustments that most states do not have. The federal rules are in how crypto is taxed in the US.

What is the Arizona flat income tax rate on crypto?

The Department of Revenue's 2025 Form 140 booklet sets a flat rate of 2.5% for all income levels and filing statuses. Crypto gains and crypto income are taxed at that same rate after Arizona's adjustments. The 2025 standard deduction in the booklet is $15,750 for single filers and $31,500 for married couples filing jointly.

Under federal rules, taxable events include selling crypto for dollars, trading one coin for another, spending it, and receiving it from mining, staking or as payment. Buying and holding is not one.

How does the Arizona long-term capital gains subtraction work?

Arizona lets residents subtract 25% of their net long-term capital gain, but only on assets acquired after December 31, 2011. The booklet is strict about dates. If the purchase date cannot be shown, the asset is treated as bought before 2012 and the gain does not qualify. Gifts and inheritances take the acquisition date of the giver or the person who died.

Long-term means held more than one year, as under federal law. Short-term crypto gains get no subtraction.

What Arizona crypto tax laws cover airdrops and gas fees?

Two subtractions on the 2025 Form 140 are aimed at crypto. Subtraction S lets taxpayers remove the value of virtual currency and NFTs received through an airdrop, measured when received, to the extent federal law has not already excluded it. It does not cover any later rise in value. Subtraction T, based on A.R.S. 43-1028, lets someone who reports a gain or loss on selling virtual currency or an NFT subtract gas fees paid to the network, if those fees were not already in the asset's basis or deducted. Federal treatment differs, as explained in are crypto airdrops taxable and what are gas fees.

What is the Arizona bitcoin reserve law?

On May 7, 2025, Governor Katie Hobbs signed HB 2749, The Block reported. It created a fund for unclaimed digital assets, held in native form rather than sold, inside the state's unclaimed property system. Custodians may stake those assets or receive airdrops. A week earlier she vetoed SB 1025, which would have let the treasurer and retirement systems invest up to 10% of their funds in crypto. The reserve does not change how residents are taxed. For the federal angle, see does the US government own bitcoin, and for other states, do states tax crypto.

Rules differ by state and change often. Check the tax authority or a qualified professional for your own situation.