Gov. Jared Polis announced the implementation of the new payment method on Monday, at Denver Startup Week, according to a report by Axios Denver.
Citizens can use cryptocurrency to pay individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax are eligible, per the report.
The state government's Department of Revenue now lists "cryptocurrency" as a payment method among the more well-established debit and credit cards, ACH debit and credit, and cash.
However, users interested in parting with their bitcoin holdings to pay Colorado state taxes need to use a PayPal account.
"Only PayPal Personal accounts can pay using cryptocurrency," Colorado's Department of Revenue details, adding that the user needs to have the entire value of their invoice in a single cryptocurrency in their PayPal Cryptocurrencies Hub.