The United States could generate up to $14 trillion in cumulative value if 1% of federal taxes are paid in Bitcoin over the next two decades, according to new modeling from Bitcoin Policy Institute presented alongside Rep. Warren Davidson’s Bitcoin for America Act.
The bill, introduced on Nov. 20, would allow taxpayers to settle federal liabilities in Bitcoin and direct every incoming coin into the Strategic Bitcoin Reserve created earlier this year by executive order.
He stated:
Bitcoin acquisition through tax
The proposal adds a new acquisition channel to the federal framework established in March, when the White House ordered all seized Bitcoin to be consolidated into a dedicated reserve and placed non-Bitcoin assets into a separate digital stockpile.
That move ended years of auctions and shifted the government toward an accumulation structure rooted in forfeiture flows.
Data from Bitcoin Treasuries show that US federal entities control 326,000 BTC following enforcement actions and asset recoveries, although attributions continue to evolve as new wallet clusters are identified.
US Bitcoin Holdings (Source: Bitcoin Treasuries)Davidson’s bill changes the mechanics by allowing voluntary Bitcoin payments to the IRS and eliminating capital-gains recognition on those transactions.
Per the bill text, Treasury would work with regulated financial institutions on custody, settlement, and cold-storage operations while recording taxpayer payments at fair value for liability satisfaction.
The structure gives individuals and businesses a way to remit appreciated Bitcoin without triggering gains, which under current rules often pushes holders to sell for dollars before paying the IRS.
The change channels Bitcoin directly into the reserve, creating a market-driven inflow that requires no appropriations or direct Treasury purchases.
Revenue modeling and valuation
The Bitcoin Policy Institute endorsed the legislation and released a model showing how Bitcoin tax payments could build a sizable reserve through steady annual inflows.
Federal receipts totaled about $5.23 trillion in fiscal year 2025, according to Treasury data. If 1% of nationwide taxes were remitted in Bitcoin, inflows would reach roughly $52.3 billion per year at today’s revenue levels.
Depending on the average Bitcoin price across the period, that translates to hundreds of thousands of coins accumulated per decade. A ten-year horizon at 1% adoption produces roughly 350,000 to 700,000 BTC added to the reserve if Bitcoin averages between $75,000 and $150,000.
At the same time, higher adoption levels scale linearly, with a 5% scenario producing about 1.7 to 3.5 million BTC across the same range, though liquidity constraints would likely influence prices in practice.
Meanwhile, the BPI’s longer 20-year scenario assumes constant adoption, a stable cost basis, and no reflexive price effects from federal buying pressure.
Under that model, 1% adoption from 2025 through 2045 yields more than 4.3 million BTC with an implied base-case terminal price of about $3.25 million per coin.
Bitcoin Hypothetical Tax Accumulation From Now till 2045 (Source: Bitcoin Policy Institute)The institute calculates a net advantage nearing $13 trillion compared to keeping the same flows in cash equivalents. This upper-bound combination of adoption and long-horizon price track reflects the compounding effect of long-term holding in a reserve that does not sell any incoming Bitcoin.
The macro backdrop shapes how the policy is interpreted. Federal deficits remain elevated, with fiscal year 2025 ending near a $1.8 trillion shortfall on $5.23 trillion in revenue, according to the Congressional Budget Office. Interest costs remain high relative to historical norms.
As a result, supporters frame Bitcoin flows as a balance-sheet hedge relative to dollar liabilities, while critics focus on the volatility that a non-yielding asset introduces when marked to market.
The executive order itself described the Strategic Bitcoin Reserve as a long-horizon repository for government-owned Bitcoin, drawing parallels to how sovereigns manage gold stockpiles rather than short-term liquidity positions.
Market and operational risks
Operational execution under Davidson’s proposal requires a Treasury overhaul, necessitating intake systems that timestamp prices, manage refund protocols for intraday volatility, and enforce sanctions screening on incoming UTXOs.
These technical mandates, which include aligning multi-signature governance with federal cybersecurity standards, complicate revenue scoring for budget analysts by removing the taxable events usually triggered when holders sell for dollars.
Beyond the internal logistics, the sheer scale of these inflows introduces volatility risks to the broader market structure.
At 1% adoption, the government’s annual Bitcoin intake approaches the volume of spot-exchange turnover during quiet periods, and higher participation rates would push flows toward the level of daily net issuance.
This persistent accumulation could tighten free float in bull cycles and widen spreads if buyer profiles become predictable, challenging the BPI model’s assumption that federal sourcing will have no reflexive impact on price.
Source: https://cryptoslate.com/new-bitcoin-for-america-act-lets-you-pay-the-irs-in-bitcoin-and-fuels-a-14t-boost-to-economy/
