Crypto tax guide: How is crypto taxed in the US?

This article is for informational purposes only and does not constitute tax, legal or financial advice. Tax rules and crypto account regulations can vary by individual circumstance. You should consult a qualified tax or financial professional before making decisions involving crypto.

Is crypto taxable in the US?

Yes, in most situations, crypto is taxable in the US – but not simply because you own it. One misconception is that you’re taxed on ‘unrealized gains’ (price going up while you hold). As a general rule, you only owe tax when you dispose of an asset or receive it as income, not while you’re just holding it.

For US federal tax purposes, the IRS treats convertible virtual currency as property, not as cash. That property treatment is why selling, trading and spending crypto can trigger capital gains or losses.

How is crypto taxed in the US?

In the US, crypto typically falls into two tax buckets:

• Capital gains (or losses): When you sell, trade or spend a digital asset.
• Ordinary income: When you receive digital assets as payment or as rewards (and similar income-like events).

Regular US tax returns include a required digital asset question. The IRS provides a questionnaire to help determine how to answer that digital asset question based on your activity during the year. 

Capital gains tax: Short term vs. long term

When you dispose of crypto, you typically calculate a capital gain or loss based on how much the asset changed in value from when you acquired it. The holding period matters:

• Short-term capital gains: If you held the asset for a year or less, gains are generally subject to ordinary income tax rates.
• Long-term capital gains: If you held the asset for more than one full year, gains are typically taxed at preferential rates (commonly 0%, 15% or 20%, depending on your taxable income).

Other rules can apply depending on your situation. For example, high earners may owe additional surtaxes, and certain assets can have special rate treatment. If you’re unsure, a tax professional can help you classify the gain correctly.

Taxable events involving crypto (what you must report)

• Selling crypto for USD or other real-world currency.
• Trading crypto for crypto (e.g., swapping BTC for ETH). This is usually a taxable disposal of the asset you gave up, measured in USD value at the time. It also simultaneously establishes a new cost basis for the asset you receive.
• Spending crypto, including buying goods or services. Using crypto to pay is treated like disposing of the crypto you spent.
• Receiving crypto as payment for work or services – usually ordinary income at fair market value when received.
• Receiving rewards from lock-up programs and similar arrangements. This is treated as ordinary income when you have dominion and control over the newly received tokens.
• Mining proceeds – in most cases, treated as income when received and may also create self-employment considerations depending on facts.
• Airdrops after certain events. The IRS has ruled that an airdrop following a hard fork can create ordinary income when you receive units and have control over them.

Non-taxable events involving crypto (what you generally don’t report)

• Buying crypto with USD and holding it.
• Moving crypto between your own wallets or accounts (self-transfers). Note: Network fees paid in crypto may be taxable.
• Gifting crypto – can be non-taxable to the giver for income tax purposes, but gifts above the annual exclusion can trigger tax reporting requirements. For gifts given in the 2026 calendar year, the annual exclusion is $19,000 per recipient.
• Donating crypto to eligible charities. This can have favorable tax treatment in many cases, but details matter.
• Creating (minting) your own NFT. Minting itself is typically not a taxable event, but later selling it can be, because network fees and related transactions can have tax effects.

Important note: Even when an action is non-taxable, your records still matter. You’ll eventually need dates and cost basis info when you do sell, trade or spend.

How to calculate your crypto taxes in the US

Most crypto disposals come down to one core formula: 

Capital gain/loss = Proceeds – Cost basis

• ‘Proceeds’ is the USD value you received, or the USD value of what you received in a trade, at the time of disposal.
• ‘Cost basis’ is what you paid to acquire the units, including certain fees that are part of acquisition or disposition costs.

Cost basis and identification methods

When you sell or trade crypto, the IRS expects you to calculate your gain or loss using the cost of the specific crypto you sold. That’s why good records matter: Dates, amounts, USD values at the time and fees help you calculate the correct gain or loss.

If you bought the same coin at different times and prices, the result can change depending on which batch you treat as sold. There are two main approaches:

• Specific identification: You pick the exact units you’re selling (for example, ‘the BTC I bought on March 3, 2025’) and your records prove it. This can help you manage taxes, but only if your tracking is detailed enough.
• FIFO (first in, first out): If you don’t clearly track which units you sold, you treat the oldest units you bought as the ones you sold first.

Some people use a consistent lot-selection strategy such as HIFO (highest in, first out) or LIFO (last in, first out) to manage taxes, but these strategies only work if you’re doing specific identification and can substantiate the lots you picked. If you can’t support the identification, FIFO usually applies.

How are DeFi, NFTs, airdrops and rewards taxed in the US?

This is where crypto taxes get slightly more complicated. You might apply the same core principles – income when received and capital gain or loss when disposed of – but be careful, because some areas are still evolving.

DeFi (decentralized finance)

• Swapping tokens is generally a taxable disposal of the token you give up.
• Providing liquidity can look like exchanging tokens for a different token (such as an LP token), which can be a taxable event.
• Rewards from protocols or platforms are often treated like income when you gain control over them. This creates capital gain or loss later when disposed of.

Because DeFi implementations vary widely, and US guidance isn’t comprehensive for every design pattern, it’s important to involve a tax professional if your activity is significant.

NFTs (Non-Fungible Tokens)

NFT taxes often involve two layers:

1. Buying an NFT with crypto –  a taxable disposal of the crypto you spent.
2. Selling the NFT later –  a taxable disposal of the NFT itself.

Also, the IRS has signaled that certain NFTs may be treated as collectibles, which can be subject to different long-term capital gains treatment than typical property.

Airdrops and hard forks

The IRS has ruled that:

• A hard fork without you receiving new units usually doesn’t create gross income.
• If you do receive new units in an airdrop following a hard fork, and you can control them, that can be considered ordinary income.

Lock-up rewards 

For many taxpayers, IRS guidance says you report rewards as income when they’re made available to you. This means you can access, transfer, sell or use the tokens even if you don’t do anything with them yet.

Tax loss harvesting explained

Tax loss harvesting means selling assets at a loss to offset capital gains. In general, capital losses first offset capital gains. If losses exceed gains, you may deduct up to $3,000 against ordinary income each year, with remaining losses carried forward.

Does the wash sale rule apply to crypto?

The wash sale rule generally applies to stocks and securities. Since the IRS treats most crypto as property (not a security), it’s commonly understood that the wash sale rule usually doesn’t apply to typical cryptocurrencies under current law. It may be different if what you’re trading is actually a security, for example, certain tokenized securities or funds.

If you’re doing a lot of loss harvesting, or trading products that might be securities, it’s worth getting professional advice so you don’t accidentally apply the wrong rules.

How to file: Forms and deadlines for 2026 filing season

Common forms for crypto reporting

• Form 8949, listing each taxable disposal (dates, proceeds, cost basis, gain/loss).
• Schedule D, summarizing capital gains and losses.
• Form 1040, which includes the required digital asset question for many filers.

Depending on your activity, you might need additional forms or schedules for income generated from mining, rewards, etc.

Tax filing deadlines

Federal tax payment is due April 15, 2026. You can still file later by requesting an extension, which gives you until October 15, 2026 to submit the return. However, you should pay what you expect to owe by April 15 (you can make a payment online even before you file) to avoid interest and possible penalties.

Form 1099-DA – what to expect

Form 1099-DA is a new tax form that some crypto exchanges and other brokers will send to you and to the IRS. It’s meant to summarize certain digital asset sales or exchanges in your account.

Starting with transactions on or after January 1, 2025, brokers must report your gross proceeds – basically, the dollar value you received when you sold or exchanged crypto.

For 2025 transactions, brokers typically aren’t required to include your cost basis (what you originally paid). So the form may show proceeds, but it might not show your actual gain or loss. That’s why your own records are still essential for calculating gains/losses on your return. 

Tools for reporting on your crypto assets

If you’ve done more than a handful of transactions, manual tracking can get messy fast. Two practical steps can simplify your process:

• Export a clean transaction history from the platforms you used. The Crypto.com App, for example, can help by providing an organized transaction history you can export (CSV) – which makes tax prep and reconciliation much more straightforward.
• Use tax software, e.g., Koinly or CoinTracker, if you have many trades, DeFi activity or multiple wallets. Many tools can ingest CSVs and help generate Form 8949 summaries.

Remember, even if you use software, you should still spot-check results – especially for transfers, fees and DeFi transactions.

FAQs about crypto tax in the US

Do I have to pay tax if I don’t sell my crypto?
In most cases, no. Simply buying with USD and holding is typically not taxable by itself.

Is crypto-to-crypto trading taxable?
Usually, yes. It’s treated as disposing of the asset you give up, using USD value at the time.

Does the IRS know about my crypto?
The IRS requires the digital asset question on returns and information reporting is expanding (including broker reporting on Form 1099-DA beginning with 2025 transactions).

What if I lost money on crypto?
Capital losses can offset capital gains and, if losses exceed gains, you may deduct up to $3,000 against ordinary income each year, carrying forward the rest.

How are debit card purchases funded by crypto taxed?
If crypto is sold or disposed of to fund the purchase, that’s generally a taxable disposal of the crypto used.

Are transfer fees taxable?
Paying network fees in crypto can be a taxable disposal of the crypto used to pay the fee. How you treat fees can be fact-specific, so always keep record of every transaction.

How do I report airdrops?
In certain cases (including an airdrop following a hard fork), you may have ordinary income when you receive new units and can control them.

What if I lost my private keys or was hacked?
Loss treatment can be complex under US rules and depends heavily on facts and current law. Consider professional advice in this instance.

How are stablecoins taxed?
Stablecoins are typically treated as property. Selling, trading or spending them can still create capital gains/losses (often small, but not always).

Can I gift crypto to avoid taxes?
Gifting crypto can avoid a capital gains event for the giver in many cases, but gift tax reporting rules may apply above the annual exclusion ($19,000 per recipient).

What is the wash sale rule for crypto?
Wash sale rules are mostly discussed as applying to stocks and securities. Many sources note they generally don’t apply to most crypto under current law, but this area could change.

How are lock-up rewards taxed?
IRS guidance indicates many taxpayers include rewards in income when they have dominion and control over them.

Do minors have to pay crypto taxes?
Potentially, yes – tax rules depend on income type and amounts, not age alone. A parent or guardian should consult a tax pro for the child’s facts.

Important information: Trading cryptocurrencies involves risks, including price volatility and market risk. Past performance may not indicate future results. There is no assurance of future profitability. Before deciding to trade cryptocurrencies, consider your risk tolerance.

This content is for informational purposes only and should not be considered investment, tax, legal or accounting advice. Crypto tax treatment depends on your specific facts and may vary by state and local rules. Tax laws and IRS guidance can change, and outcomes may differ based on how you acquired, used, and reported digital assets. You are responsible for maintaining your own records and reporting accurately. For advice tailored to your situation, consult a qualified US tax professional.