President-elect Donald Trump Pledges to Eliminate Capital Gains Taxes on Bitcoin and U.S.-Linked Cryptocurrencies

The crypto-friendly plan would encourage the wider use of digital currencies for everyday transactions while bolstering crypto firms based in the United States.

Former President Donald Trump has proposed eliminating capital gains taxes on Bitcoin and U.S.-linked cryptocurrencies, aiming to encourage broader digital currency use for everyday transactions and bolster crypto firms based in the country.

During a recent interview, Trump discussed a conversation with a friend about the U.S. tax system, which led him to question the fairness of taxing digital asset trades.

“They have them paying tax on crypto, and I don’t think that’s right,” Trump said. “Bitcoin is money, and you have to pay capital gains tax if you use it to buy a coffee? I was talking with a friend. He said, ‘It really shouldn’t be taxed,’ and I agree. Maybe we get rid of taxes on crypto and replace it with tariffs.”

Under current regulations, using Bitcoin to purchase a good or service can trigger capital gains taxes if its value has appreciated since it was acquired. The complexity deters people from using digital assets for everyday expenses. Trump's proposal aims to remove this obstacle and facilitate the use of cryptocurrencies in daily commerce.

Trump's Tax-Free Push for U.S.-Made Cryptocurrencies

Trump's plan also seeks to boost U.S.-made cryptocurrencies by removing taxes on them and only taxing American-made tokens.

“No tax on crypto but only on tokens made in the USA. We want tokens made here at home, we don’t want the Chinese tokens. We say get those Chinese tokens out of here,” he stated.

This move aligns with his broader goal of supporting American companies and reducing foreign digital dependency. The proposal has drawn attention within the crypto community, as it could potentially drive more people and businesses toward using U.S.-based cryptocurrencies. Removing tax barriers could help build a stronger local crypto market.

In contrast, Vice President Kamala Harris has expressed support for higher long-term capital gains tax rates, proposing an increase to 28% from 20% for individuals earning over $1 million annually. Her stance reflects a more cautious approach to cryptocurrency taxation, emphasizing the need to generate revenue and address income inequality.

Can Tariffs Replace Income Tax in Trump’s Vision?

Individual income tax generates almost $5 trillion in federal revenue. Trump has suggested using higher tariffs to compensate for removing income taxes, drawing comparisons to the U.S. economy in the 1890s, when tariffs were a major source of revenue. However, economists note that tariffs now contribute only around 2% to federal revenue, indicating that substantial increases would be necessary to cover the tax cuts.

Jason Miller, a senior adviser to Trump's campaign, has clarified that eliminating income taxes is an “aspirational goal.” He noted that the immediate focus would be on extending provisions of the 2017 Tax Cuts and Jobs Act and implementing targeted tax reductions.