How is crypto taxed in Colorado?

Crypto tax in Colorado follows the federal rules and then applies the state's own income tax rate. The IRS treats crypto as property, so selling, swapping or spending it can create a gain, and crypto received as pay or rewards is income. Colorado picks those amounts up on its own return. The federal side is explained in how crypto is taxed in the US.

How is crypto taxed in Colorado?

The Department of Revenue says Colorado income tax is based generally on federal taxable income, with certain additions and subtractions. There is no separate crypto rule on the state return. If a sale of bitcoin creates a capital gain on your federal Schedule D, or if mining or staking rewards count as income federally, that amount is already inside the federal taxable income that Colorado uses as its starting point.

The IRS lists the usual taxable events. They include exchanging crypto for dollars, for another crypto or for goods and services, and receiving crypto from mining, staking or as payment. Buying and holding is not one of them.

What is the Colorado crypto tax rate?

The 2025 Colorado individual income tax booklet says the rate is currently 4.4%. It is a flat rate, so crypto gains and ordinary income are taxed at the same percentage. Colorado has no general discount for long-term capital gains. The only capital gain subtraction described in the 2025 booklet is for agricultural land and is capped at $100,000.

That may change. On November 3, 2026, Colorado voters weighed Amendment 87, which would replace the flat rate with graduated rates from 3.7% to 8.4%, with 7.4% starting above $500,000 of income. As of November 6, 2026, unofficial results showed it narrowly passing, and a rival measure to cap the rate at 4.4% was losing. The sources reviewed did not say which tax year the new rates would first apply to. A large one-off gain, such as selling a big crypto holding, is the kind of income the upper brackets would reach.

Can you pay Colorado taxes in crypto?

Yes. Since September 1, 2022, the Department of Revenue has accepted crypto for individual income, business income, sales and use, withholding, severance and fuel excise taxes. Payments run through the PayPal Cryptocurrencies Hub, and only PayPal personal accounts can be used.

The fee is $1 plus 1.83% of the payment. The full invoice must be covered by a single cryptocurrency in your hub, and the coins are converted to dollars before the state receives them. Refunds are never paid in crypto. Spending crypto this way is itself a disposal for federal tax purposes, so it can create a gain or loss. Other states are compared in do states tax crypto, and other payment options in can you pay taxes with crypto.

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