Lawmakers in Rhode Island have reintroduced a temporary bill aimed at exempting small bitcoin (CRYPTO:BTC) transactions from state income and capital gains taxes for the second year in a row.
The proposal is framed as a pilot-style effort designed to reduce tax friction on everyday bitcoin use rather than long-term investment activity.
Senate Bill S2021 was introduced on 9 January by Peter A. Appollonio and has been referred to the Senate Finance Committee for review.
The bill would create a limited income tax exemption for bitcoin transactions made by state residents and Rhode Island–based businesses.
Under the proposal, bitcoin sales or exchanges would be exempt from state income and capital gains taxes up to $5,000 per month.
The monthly exemption would be capped at $20,000 per year for each qualifying taxpayer.
The legislation amends Rhode Island’s personal income tax code by adding a new section focused solely on bitcoin transactions.
Bitcoin is defined in the bill as a digital, decentralised currency based on blockchain technology.
The exemption would apply to individuals who reside in the state as well as businesses that are based and primarily operate within Rhode Island.
Qualifying bitcoin transactions that fall below the exemption thresholds would not be included in taxable income for state tax purposes.
Taxpayers would be permitted to self-certify their eligibility on annual state tax returns without reporting each individual transaction.
Participants would still be required to keep reasonable records to demonstrate compliance with the annual exemption limit.
Those records would only need to be provided if requested by state authorities during an audit.
The bill instructs the Rhode Island Department of Business Regulation to issue plain-language guidance on acceptable recordkeeping practices.
The department would also outline valuation methods using publicly available bitcoin price indices to determine market value at the time of transactions.
The exemption is explicitly temporary, with a proposed start date of 1 January 2027 and a sunset date of 1 January 2028.
Lawmakers say the General Assembly would review the fiscal and economic impact before deciding whether to extend or amend the programme.
Supporters describe the measure as a practical step towards treating digital money more like traditional currency for small, everyday payments.
Only a small number of US states have pursued similar approaches to easing tax treatment on low-value crypto transactions.
Ohio has explored a narrow de minimis exemption that would remove state capital gains taxes on small crypto purchases below a low dollar threshold.
New Hampshire has taken a broader pro-bitcoin stance after approving legislation in May 2025 allowing limited public fund investment in major digital assets.
At the time of reporting, Bitcoin price was $95,691.63.