New York Assembly Bill A7788 Seeks to Allow Residents to Pay Taxes in Bitcoin

New York is taking a bold step toward mainstream crypto adoption. A new legislative proposal seeks to allow residents to use digital assets like Bitcoin, Ethereum, and Litecoin

New York might soon accept tax payments in Bitcoin, according to a new legislative proposal.

Assembly Bill A7788, introduced by Assemblyman Clyde Vanel, seeks to amend New York’s state finance law to allow government agencies to accept cryptocurrencies for a variety of payments.

The bill, which has now advanced to the Committee on Governmental Operations, proposes an amendment to Article 7-A of the state’s finance law, specifically section 123-c, which would authorize state agencies to enter into agreements with persons for the acceptance of cryptocurrency.

“Each state agency is authorized to enter into agreements with persons to provide the acceptance, by offices of the state, of cryptocurrency as a means of payments of fines, civil penalties, rent, rates, taxes, fees, charges, revenue, financial obligations or other amounts including penalties, special assessments and interest, owed to state agencies,” the bill stated.

The bill provides for the state agencies to be able to—but not required to—enter into agreements to accept crypto payments, and each agency would have the flexibility to determine whether accepting digital assets aligns with its operations.

“The state agency may impose a service fee for each transaction in cryptocurrency to reimburse the state for any actual costs incurred by the state in processing such transactions, which service fee shall be limited to the actual cost to the state, including, but not limited to, network transaction charges or other fees incurred during processing,” the bill added.

If approved, the bill will go into effect 90 days after being signed into law.

While the bill signals a more crypto-friendly stance in New York, not all state leaders support it.

Attorney General Letitia James recently urged federal lawmakers to enact stronger regulatory frameworks for the crypto industry in a separate statement of her own.

James said in her statement that, without clear federal oversight, digital assets could erode the dominance of the US dollar, expose national security risks and facilitate illegal financial activity.

“A strong dollar is in America’s national interest. It means there is demand for and confidence in US institutions and the US economy. America should defend the prime position of the US dollar for global transactions—a position that Bitcoin, which can instantly transfer value globally, threatens,” James said in her statement.

She added that bad actors can use cryptocurrencies to bypass traditional financial systems, fund adversarial regimes or support criminal enterprises.

Despite acknowledging the innovative potential of blockchain, James highlighted the critical need for federal intervention to mitigate the risks posed by cryptocurrencies.

In her recommendations to Congress, James urged the integration of anti-money laundering requirements for platforms handling digital assets, necessitating registration for issuers and intermediaries.

Moreover, she advised against permitting contributions to retirement accounts in cryptocurrencies and recommended imposing limitations on the use of cryptocurrencies for tax payments.

Her recommendations are designed to protect investors, promote market transparency and safeguard the broader economy.

“As Congress takes the mantle to propose legislation governing the cryptocurrency industry, we hope it also takes action to mitigate the risks posed by the industry to America’s national security, financial stability, and citizens,” James concluded in her statement.

As New York continues to navigate the evolving landscape of digital assets, officials remain divided on how best to balance innovation with long-term financial security.

If the state's move to accept tax payments in Bitcoin comes to fruition, it could set a precedent.