- President Joe Biden has revealed his proposed fiscal year 2025 budget, incorporating substantial tax measures aimed at the cryptocurrency sector
- The proposed taxes, including a crypto mining excise tax and regulations concerning wash-sale rules, are estimated to generate some $40 billion in revenue over a decade
- These tax proposals resemble those put forward last year, though Congress did not enact them
US President Joe Biden has unveiled his proposed fiscal year 2025 budget, which includes several significant tax measures targeting the cryptocurrency industry. Among these measures are a crypto mining excise tax and regulations addressing wash-sale rules related to digital assets, which the Biden administration thinks could generate nearly $10 billion in revenue in 2025 and over $42 billion over the next decade. This budget proposal echoes similar tax proposals made last year, which were ultimately not adopted by Congress.
No More Wash Trading
The 2025 budget includes key proposals aimed at closing tax loopholes that primarily benefit wealthy individuals and large corporations, addressing various tax strategies such as like-kind exchange loopholes for real estate investors and tax-preferred retirement incentives. Additionally, it targets tax breaks related to corporate jets and life insurance tax shelters.
It also includes provisions to apply the same wash-sale rules that exist in traditional markets to digital assets, preventing investors from selling an asset at a loss and quickly repurchasing it to claim a tax deduction. The administration aims to extend these rules to the crypto market in order to prevent tax abuse within it.
According to projections provided in the budget proposal, incorporating digital asset transactions into wash-sale rules could generate over $1 billion in revenue in the 2025 fiscal year alone.
New Taxes Bringing in the Bucks
Other proposed changes would see extra reporting requirements for financial institutions and digital asset brokers, new rules around reporting foreign crypto accounts, and the incorporation of cryptocurrencies into mark-to-market rules. These are based on the crypto element of the 2021 Infrastructure Bill.
Including cryptocurrencies in mark-to-market rules could generate over $8 billion in revenue while the full package of measures could contribute over $42 billion to government revenue over the next decade. This includes an excise tax on crypto mining activities, which the administration also wants to bring in.
While this proposal reintroduces measures previously put forward by the Biden administration, it remains uncertain whether Congress will adopt these tax reforms or if they will, again, reject them.
