US lawmakers reintroduce PARITY Act to exempt small crypto transactions from IRS reporting

Four US lawmakers have reintroduced the PARITY Act, directing the IRS to study exemptions for small crypto transactions, a reform the industry says is long overdue given that 75% of the 56 million crypto tax forms currently filed with the agency involve transactions worth less than $50.

The proposal, introduced by Representatives Steven Horsford, Max Miller, Suzan DelBene, and Mike Carey, aims to modernize how digital assets are taxed and could ease compliance burdens for everyday crypto users.

The bill arrives as crypto investors and industry participants continue to criticize existing IRS rules that classify nearly every digital asset transaction as a taxable event, including small purchases made with Bitcoin or stablecoins.

If enacted, the legislation could become one of the most consequential crypto tax reforms currently under discussion in Washington.

Congress revisits crypto tax reform

The revised legislation, formally known as the Digital Asset Protection, Accountability, Regulation, Innovation, Taxation and Yields (PARITY) Act, would require the IRS to examine how small digital asset transactions are treated under current tax law.

Under current IRS guidance, even minor crypto purchases can trigger capital gains reporting obligations. Industry advocates argue that this framework discourages the use of crypto as a practical payment tool.

Coindesk reported that the crypto industry has long argued that freeing taxpayers of the burden of having to file and report taxes on small transactions would make it easier to use crypto as a payments tool for small items like a cup of coffee.

The latest proposal also updates language around regulated payment stablecoins.

According to the bill, qualifying stablecoin transactions would not incur gains or losses unless the holder’s cost basis falls below 99% of the asset’s redemption value.

Lawmakers say outdated tax rules hurt innovation

Representative Steven Horsford described crypto taxation as a foundational issue for the industry’s future in the United States.

Horsford also argued that existing federal tax rules fail to address modern crypto use cases, including staking rewards, lending activity, and charitable contributions involving digital assets.

The revised PARITY Act additionally introduces provisions addressing wash-sale rules, broker safe harbors, and taxation related to validator activity, signaling broader efforts to establish clearer guidance for digital asset investors and platforms.

Crypto industry intensifies pressure on IRS reporting rules

The push for reform comes amid growing criticism from crypto exchanges and tax advocates over the scale of current reporting requirements.

According to a report highlighted by Kraken, roughly 75% of the 56 million crypto tax forms submitted to the IRS involved transactions worth less than $50. Half of those filings reportedly involved transactions under $10.

Cointelegraph reported earlier this year, citing industry executives who argue that taxation, rather than blockchain scalability remains the primary barrier to mainstream crypto payments adoption.

The debate has also gained traction among policy groups and crypto advocacy organizations, many of which have pushed for exemptions ranging from $200 to $600 for low-value digital asset transactions.

Still, lawmakers and regulators remain cautious about potential loopholes and abuse.

The proposed IRS review would specifically examine how a de minimis exemption could be exploited and what administrative resources would be required to enforce such a framework.

Investors watch for broader regulatory momentum

For crypto investors and market participants, the latest bill reflects increasing bipartisan momentum toward digital asset regulation in the United States.

While the proposal does not immediately eliminate taxes on small crypto payments, it signals growing recognition in Washington that existing rules may be outdated for modern blockchain-based transactions.

The legislation is still in its early stages, and it remains unclear whether Congress will advance the measure this year.

Previous attempts at crypto tax relief, including proposals backed by Senator Cynthia Lummis failed to make it into broader budget legislation.

However, investors are closely monitoring developments as lawmakers continue debating the future of crypto taxation, stablecoin oversight, and digital asset regulation ahead of the next phase of U.S. financial policy discussions.