Fair Taxation of Digital Assets in Puerto Rico Act of 2025
This bill, titled the Fair Taxation of Digital Assets in Puerto Rico Act of 2025, would change how income from digital assets earned by Puerto Rico residents is sourced for U.S. tax purposes. Specifically, it adds a new provision to the Internal Revenue Code stating that for individuals described in section 933 (Puerto Rico residents), income from digital asset activities—such as mining, staking, holding (including forks or airdrops), and the sale or exchange of digital assets—shall not be treated as Puerto Rico-sourced income. In other words, this income would no longer be considered derived from sources within Puerto Rico under the federal tax code. The change would apply to taxable years beginning after the bill’s enactment. The bill also clarifies that a “digital asset” includes assets recorded on a cryptographically secured distributed ledger, and that a financial interest in a digital asset is itself treated as a digital asset.
Key Points
- 1Creates new Section 865(i) (by redesignating and inserting it after subsection (h)) to address digital asset income of Puerto Rico residents.
- 2For Puerto Rico resident individuals (described in section 933), income from (a) receipt of a digital asset through mining, staking, or similar activities, or holding such assets (including forks or airdrops), and (b) sale or other disposition of a digital asset, is not treated as Puerto Rico-sourced income.
- 3Defines “digital asset” as any digital representation of value recorded on a cryptographically-secured distributed ledger, and treats any financial interest in a digital asset as a digital asset.
- 4Applies to taxable years beginning after enactment.
- 5The change is limited to the sourcing treatment for digital asset income of PR residents; it does not expressly change other tax rates or rules outside sourcing.