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Bitcoin-Friendly Texas? New Bill Targets Capital Gains Tax Removal

Texas proposes a bold bill to eliminate capital gains tax on Bitcoin, crypto, stocks, and real estate. Learn how this move could reshape investment trends and position Texas as a top crypto-friendly state.

In a bold legislative move that could transform its financial and digital landscape, Texas lawmakers have introduced a bill that seeks to eliminate capital gains tax on assets like Bitcoin, Ethereum, XRP, stocks, and real estate. This initiative aligns Texas with a growing trend of crypto-friendly policies and positions it to compete directly with Missouri, which recently advanced similar legislation.

Table of Contents

Inside the Bill: A Push Toward Zero Capital Gains Tax

The bill, dubbed House Bill 3174, was introduced by Rep. Carla Martinez (R-Dallas) and has garnered early bipartisan interest. If passed, the legislation would exempt all capital gains from state income taxation, effectively eliminating a major cost burden on investors and entrepreneurs.

“Texas has always been a haven for freedom and innovation,” said Martinez during a press briefing. “This bill is about financial liberty, encouraging investment, and sending a clear message to the world: Texas is open for crypto business.”

Texas currently does not levy personal income tax, but capital gains are still taxed indirectly through certain corporate and partnership structures. HB 3174 would close that gap, extending tax relief to digital asset holders and traditional investors alike.

Crypto Adoption Surges in the Lone Star State

Texas has rapidly emerged as a hub for blockchain innovation and cryptocurrency mining, particularly after China’s mining ban in 2021. Major players like Riot Platforms and Core Scientific operate massive facilities in the state, drawn by its abundant energy resources and relatively low regulatory friction.

This bill could supercharge that momentum, making Texas even more appealing to both retail and institutional crypto investors. The proposed exemption covers gains realized from digital assets, stocks, bonds, real estate, and even private equity transactions.

Economic and Political Implications

Analysts believe the bill could significantly boost investment activity and attract high-net-worth individuals, tech startups, and even financial firms to relocate or expand their operations in Texas. However, the proposal isn’t without criticism.

Opponents argue the bill could lead to reduced state revenue and may disproportionately benefit the wealthy. Some lawmakers have also expressed concerns about volatility in crypto markets and the risk of creating “tax shelters” without proper regulatory checks.

Still, the political wind appears favorable. With Governor Greg Abbott previously expressing pro-crypto sentiments and several Texas Republicans aligning with national efforts to deregulate digital finance, the bill may have a viable path to becoming law.

A National Movement?

Texas joins a growing list of states — including Missouri, Wyoming, and Florida — exploring or implementing capital gains tax exemptions for digital assets. This reflects a broader trend toward state-led tax reform in response to the evolving digital economy.

At the federal level, former President Donald Trump recently floated a sweeping proposal to eliminate income tax entirely and shift revenue generation to import tariffs, potentially signaling deeper reforms on the horizon.

Investor Impact and Market Reaction

Crypto markets reacted positively to the Texas bill’s introduction. Bitcoin (BTC) climbed past $105,000, and Ethereum (ETH) held strong above $6,300, suggesting investor confidence in a friendlier U.S. regulatory environment.

“Legislation like this reduces long-term uncertainty,” said Rachel Kim, a senior analyst at CryptoInsight. “It gives investors a reason to hold assets longer, reinvest locally, and participate in the Web3 economy without fearing aggressive tax penalties.”

Conclusion

If passed, House Bill 3174 would make Texas one of the most crypto-friendly jurisdictions in the world, not just the U.S. It would strengthen the state’s status as a financial innovation hub and reinforce its commitment to individual financial freedom.

The eyes of the crypto world — and indeed Wall Street — are now firmly fixed on Austin.

FAQs

What is the new Texas bill about capital gains tax?

The proposed bill, House Bill 3174, seeks to eliminate capital gains tax on assets such as cryptocurrencies, stocks, real estate, and other investments. It would apply to both individuals and entities, potentially making Texas a leader in tax-friendly investment policy.

Does Texas currently tax capital gains?

Texas does not have a personal income tax, but capital gains can still be taxed indirectly through business structures or federal pass-throughs. The bill aims to ensure complete exemption at the state level for all types of capital gains.

Which assets are covered under the proposed exemption?

The exemption would apply to:

  • Cryptocurrencies (e.g., Bitcoin, Ethereum, XRP)

  • Stocks and bonds

  • Real estate

  • Private equity and other investment vehicles

When will the bill take effect if passed?

If passed during the current legislative session and signed by Governor Greg Abbott, the bill could take effect as early as January 1, 2026, aligning with the state’s fiscal calendar.

How does this compare to Missouri's bill?

Missouri's House Bill 594 also proposes a full exemption of capital gains from state income taxes. Texas’s bill mirrors this effort but could have a larger economic impact due to its size, existing crypto infrastructure, and absence of personal income tax.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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