Every small payment made with Bitcoin in the United States gives rise to complex reporting obligations due to current tax regulations. Bitcoin Policy Institute called on Congress to change this situation with a policy report published in March 2026. The institution emphasizes that the current practice has been a serious obstacle to the widespread use of Bitcoin as a means of payment for years.
Current Tax Regulations and Issues
In a regulation published by the IRS in 2014, Bitcoin was classified as property. Therefore, every purchase made with Bitcoin in the US — whether it’s a coffee payment of a few dollars or a larger transaction — is subject to capital gains tax, and each transaction must be calculated and reported separately. BPI states that it does not make sense to run a detailed tax process even for a gain of just a few cents, and this burden makes it difficult to use digital money in daily life.
BPI’s Solution Recommendations
The US-based Bitcoin Policy Institute recommends that its use exemption, which applies to transactions with foreign currencies, also be applied to crypto assets. The institution’s proposed model includes tax-free payments up to a limit of $600 per transaction and $20,000 per year. This application aims to facilitate daily use by eliminating the need for complex cost calculations in small amounts of bitcoin payments.
In addition, with the bill titled “Bitcoin for America Act”, it is requested that individuals be allowed to make their tax payments via bitcoin and that the capital gains tax liability in these transactions be eliminated. Another bill, introduced by Wyoming Senator Cynthia Lummis, includes a limit of $300 per transaction and $5,000 per year. It was stated that this proposal, submitted to the US Congress, would lead to an increase in the state budget.
Stablecoin Exception Discussions
Another topic that stands out among the current discussions is the draft law that proposes that the scope of legal exemption should be applied only to stablecoins. The regulation proposed by Congressmen Max Miller and Steven Horsford covers only fixed-price digital assets, leaving Bitcoin and other crypto assets out of the exemption. BPI states that stablecoin holders are not affected by price fluctuation and thinks that the exemption will not meet the main need.
The Bitcoin Policy Institute states that the stablecoin exemption would exclude Bitcoin users who bear the brunt of the burden and calls for the scope to be expanded.
New IRS Practices and Increased Obligations
As of 2026, the US Tax Administration has made reporting of crypto transactions even stricter. With the introduction of the 1099-DA form, central exchanges are required to report digital asset sales directly to the institution. Additionally, unlike the previous application, cost accounting must now be kept on a wallet basis. When users transfer their bitcoin assets between different wallets and exchanges, separate cost calculations are made for each, making the recording and reporting process more complicated.
All these new obligations coincide with the reform agenda to exempt small daily transactions made with Bitcoin from tax. This contradiction is brought to the agenda by BPI and some MPs.
Time Pressure in Congress
Bitcoin Policy Institute met with 19 Congressional offices over the past three months and emphasized that digital assets other than stablecoins should also be included in the exemption. The hearings held in the House of Representatives and the Senate indicate that the text of the law will be prepared in the future. While Senator Cynthia Lummis’s efforts to increase committee support continue, Senator Daines states that a legislative amendment is targeted by the summer of 2026. Lummis’ departure from the Senate at the beginning of 2027 increases the pressure to resolve the issue soon.
