Colorado accepts cryptocurrency for tax payments. Taxpayers aren’t biting.

The Colorado Department of Revenue began accepting cryptocurrency as payment for income tax, sales and use tax, and all other state taxes on September 1, 2022. Among the first states to embrace crypto, it’s at the forefront of a new era in tax — or would be if taxpayers would take to the idea. 

Colorado has received just 78 payments via virtual currency since launching cryptocurrency tax payments in September 2022: eight in 2022, 22 in 2023, and 48 in 2024. (If data for 2025 is available, we don’t have it.)

Total tax collections for September 2022 through December 2024 amount to $57,211, a fraction of a fraction (about 0.0005%) of the billions of tax revenue Colorado takes in each year. To put the numbers in perspective, Colorado received $11 billion in individual income tax in fiscal year 2022–23 alone.

Nonetheless, Colorado doesn’t appear to be discontinuing its cryptocurrency tax payment program. 

Ohio became “the first state in the United States, and one of the first governments in the world, to accept cryptocurrency.” It launched its program in November 2018, but Ohio stopped accepting cryptocurrency tax payments in October 2019. It’s now working to accept bitcoin for state fees.  

When Governor Jared Polis broke the crypto tax news during a February 2022 interview with CoinDesk, he said Colorado was looking for crypto companies to accept and convert cryptocurrency payments on behalf of the state.

“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,” Polis explained. The state also wanted to be able to accept payments in a wide variety of cryptocurrencies, said Polis, “just as we do in credit cards.”

In 2025 as in 2022, cryptocurrency tax payments can only be made through the PayPal Cryptocurrencies Hub. According to the Colorado Department of Revenue, cryptocurrency payments must be made through PayPal Personal accounts, and transfers from external wallets must be made via the PayPal mobile app. PayPal Business accounts cannot pay using cryptocurrency. 

Taxpayers pay a fee for the privilege of paying their taxes with crypto: Service fees include an additional dollar plus 1.83% of the payment amount. Polis noted in 2022 that the transaction cost was “a lot less for crypto” than it was for credit cards. Nevertheless, it’s still more than some taxpayers want to swallow.  

Colorado initially planned to eventually accept cryptocurrencies for other transactions as well, such as payment for driver’s licenses and fishing licenses. Whether it still has an appetite for that remains to be seen.

Cryptocurrency tax payments were just one way Colorado embraced the crypto economy. The state of Colorado has its very own Blockchain Solution Architect and is exploring ways to use blockchain for agriculture and “ cattle,” though that seems a bit oxymoronic. The city of Denver tried using blockchain technology to facilitate voting for residents overseas.

Colorado isn’t acting in isolation: Numerous state and local governments are researching the technology and its uses. 

Florida, Hawaii, and Utah are among the growing number of states with a blockchain or cryptocurrency task force. Arizona, California, and New York have looked into letting state agencies accept cryptocurrency as payment for fines, penalties, taxes, or other services. And both Miami, Florida, and New York City experimented with city-based digital currencies; the cryptocurrency exchange they used suspended their trading in 2023. 

The federal government is also crypto-curious.

President Donald J. Trump announced the establishment of a strategic bitcoin reserve and United States digital asset stockpile in March 2025. On a more personal note, the Trump family’s World Liberty Financial is launching a stablecoin. 

Former President Joseph R. Biden took a slightly different approach. In March 2022, he signed an executive order on ensuring responsible development of digital assets. “The United States must maintain technological leadership in this rapidly growing space,” explained a related White House Fact Sheet, “supporting innovation while mitigating the risks for consumers, businesses, the broader financial system, and the climate,” 

It may seem like Monopoly money to some of us, but cryptocurrency is real. So is the metaverse, which is also getting some attention from tax authorities.

This post has been updated; it was originally published on March 11, 2022.