As Benjamin Franklin once said:” in this world nothing can be said to be certain, except death and taxes.” Taxes are a normal part of life. When the tax season comes, you must organize your information, fill out tax returns, and wait for tax refunds (if any). The aim of taxes is to generate revenue for the government, funding its operations and services. To build a strong nation, it’s important to have responsible citizens. There’s more than one way to make a payment, and some of the options might surprise you. If you want to tackle your tax bill differently, we suggest you stick to cryptocurrency. You can use Bitcoin, Ethereum, or any other cryptocurrency. 

Colorado Is the First US State to Accept Payments in Crypto for State Taxes and Fees 

In recent years, state legislatures have been exploring ways to regulate and capitalize on the growing interest in cryptocurrency. Several proposals have been made to include alternative payment methods for debts, public charges, taxes, and dues, yet they’ve faced legal and political hurdles. To exemplify, Ohio announced it would allow businesses to use Bitcoin to pay tax bills in 2018, a service that lasted less than 12 months before it was outlawed and activity ceased. Apart from Ohio, Colorado is the only state to have expressed an interest in allowing cryptocurrency to be used for tax payments. Since September 2022, Colorado citizens have been able to pay their taxes via cryptocurrency.

Eligible tax types are:

  • individual income tax
  • business income tax,
  • sales and use tax
  • withholding tax
  • severance tax
  • excise fuel tax 

Attention needs to be paid to the fact that there’s a service fee of $1 and 1.83% of the total payment amount. Cryptocurrency payments need to be made through PayPal. Customers in the US and US territories can transact with four different digital assets, namely Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. To transfer your cryptocurrency from an exchange to PayPal, you must proceed in the same manner as transfers from an exchange to a MetaMask wallet. More precisely, it’s necessary to log into your account, select the currency you’d like to withdraw and copy and paste the wallet address. 

A sufficient amount of cryptocurrency is required to cover tax, obligation, and fees. The digital money is converted to dollars and then remitted to the Department of Revenue to finalize the online transaction. Tax refunds aren’t issued in cryptocurrency. Since cryptocurrency is regarded as property by the federal government, people must pay taxes on their holdings prior to using cryptocurrency as a payment method. This might possibly deter some from using cryptocurrency to meet their tax obligations. Even if cryptocurrency is decentralized as far as transactions are concerned, there are instances where owners owe taxes on it, such as trading mining, using it to pay for goods and services, or receiving it as a payment or reward. 

Should You Pay Your Taxes with Cryptocurrency? Why, Yes!

Taxes are essential to fostering economic growth and development, not to mention achieving a prosperous and functional society. Although we interact with taxes on a daily basis, we only think about them at the beginning of the year, when the tax season rolls in. Each government has its particular focus, with big-picture spending on things like Social Security. If you’re a citizen of the US, you must file taxes, even if you have no income. The tax year starts January 1 and ends December 31. Just because you have a tax obligation, that doesn’t mean you automatically owe something, as there are some tools the US provides to ease the tax burden. 

Ethereum, rather than Bitcoin, will be at the forefront of crypto adoption because it’s a hub of innovation and activity. Polygon, a protocol and framework for building Ethereum-compatible blockchain networks, provides faster and more affordable transactions. Its popularity went up from 23% in 2022 to 41% in 2023, according to the data shared by Ryan Wyatt. Polygon helps build and scale decentralized applications and projects, fostering innovation and adoption. You can use a debit or credit card that’s connected to your exchange to realize numerous types of payments. 

Nevertheless, there are certain aspects to take into account. To be more precise, think about the following: 

  • Crypto Transactions Usually Cost. When you perform an action on the blockchain, transaction fees are paid. Bitcoin transactions are paid in Bitcoin (what else?), while Ethereum transactions are paid in Ethereum. Of course, cryptocurrency isn’t the most expensive payment option when it comes to paying your taxes. 
  • It Doesn’t Fit A HODL Strategy. Iconic investors praise the buy-and-hold approach, as it offers long-term results. If you acquired Ethereum because you planned to hold it for the long term, using it to pay your taxes is counterintuitive. It’s much like dipping into your savings account. 

Colorado Follows in The Footsteps of Other States to Bring Crypto Into The Mainstream 

Various states in the US have made attempts to attract crypto investors and businesses. Wyoming, for instance, has introduced crypto banks to support companies in the sector. It has no state income tax. Arizona plans to make Bitcoin legal tender and allow state agencies to accept Bitcoin. Back in 2022, New York City’s mayor, Eric Adams, received the first paycheck in cryptocurrency, converted to Ethereum or Bitcoin. Colorado has been laying the groundwork to be a hub for cryptocurrency and blockchain innovation, and the fruition of that groundwork is here. Colorado is the only state to have made the move to accepting crypto payments for state taxes and fees. 

As opposed to other States, Colorado has a state income tax, which translates into the fact that income from wages, not to mention cryptocurrencies, are subject to tax. In the old days, anyone who wanted to pay their taxes using cryptocurrency had to go to an exchange, facilitate payment through that exchange, and convert the cryptocurrency to cash. At present, it’s possible to pay with the cryptocurrency in your wallet. Not everyone is sold on the idea, but there are always going to be skeptics. 


Colorado, the first state to use blockchain technology for government infrastructure, enables residents to pay taxes via cryptocurrency, which carries lower fees than credit card payments. It might just be what the cryptocurrency movement needs to go mainstream.