Crypto Taxes in the U.S.: The Complete Guide
Updated September 28, 2026. New to the topic? Start with the short version: Do I Have to Pay Taxes on Crypto? The Basics.
The IRS treats every cryptocurrency, stablecoin and NFT as property, so almost every sale, swap, spend or reward has a tax consequence. This guide explains the full set of federal rules in plain English, using only the tax code, Treasury regulations and official IRS guidance. It covers the rules in force as of late September 2026.
What Changed in 2025–2026
The basic rule (crypto is property) has not changed since 2014. What changed is reporting and record-keeping, and those changes now affect nearly every trader.
| When | What changed | Source |
|---|---|---|
| Transactions on or after Jan. 1, 2025 | Custodial platforms must report your gross sale proceeds to you and the IRS on the new Form 1099-DA. | T.D. 10000 |
| Jan. 1, 2025 | You must track cost basis separately for each wallet or account, not across all of them. A one-time safe harbor let you assign old basis to each wallet as of that date. | Rev. Proc. 2024-28 |
| Tax year 2025 returns | Form 8949 has new boxes G–L used only for digital assets. | Form 8949 instructions |
| Transactions on or after Jan. 1, 2026 | Platforms must also report your cost basis for digital assets acquired in that account on or after Jan. 1, 2026 ("covered" assets). | IRS digital assets page |
| From 2026 | To pick which units you sell on a platform, you must tell the platform by the time of the trade (the 2025 relief that allowed notes in your own records has ended). | IRS FAQs 84–85, 88 |
The Foundation: Crypto Is Property
Since Notice 2014-21, the IRS has treated virtual currency as property, not as currency. General property rules apply, the same ones that govern stocks, real estate or collectibles.
The tax code now uses the broader term digital asset. Under section 6045(g)(3), added by the Infrastructure Investment and Jobs Act of 2021, a digital asset is any digital representation of value recorded on a cryptographically secured distributed ledger (or similar technology). Cash issued by a government or central bank is excluded, even in digital form (IRS FAQ 47).
That definition covers:
- Cryptocurrencies such as Bitcoin and Ether
- Stablecoins
- Non-fungible tokens (NFTs)
Two consequences follow from the property rule:
- Getting rid of crypto (selling, swapping, spending) creates a capital gain or loss for most people.
- Receiving crypto as pay or as a reward creates ordinary income equal to its dollar value when you receive it.
Taxable vs. Non-Taxable Events
A transaction can create a capital gain or loss, ordinary income, or nothing at all. The table sorts the common cases (IRS digital assets page; IRS FAQs).
| What you did | Tax result | Source |
|---|---|---|
| Sold crypto for U.S. dollars | Capital gain or loss | FAQ 49 |
| Swapped one crypto for another (including into or out of a stablecoin) | Capital gain or loss on the crypto you gave up | FAQs 64, 66 |
| Paid for goods or services with crypto | Capital gain or loss | FAQ 62 |
| Paid a network or "gas" fee in crypto | Gain or loss on the crypto used for the fee | FAQ 97 |
| Got paid in crypto as an employee | Wages (income tax, FICA, W-2) | FAQ 61 |
| Got paid in crypto as a freelancer | Self-employment income | FAQ 60 |
| Received mining or staking rewards | Ordinary income | Notice 2014-21; Rev. Rul. 2023-14 |
| Received new coins from a hard fork or an airdrop you control | Ordinary income | Rev. Rul. 2019-24 |
| Bought crypto with dollars and held it | Not taxable | IRS digital assets page |
| Moved crypto between your own wallets | Not taxable (except crypto spent on the fee) | FAQ 81 |
| Received crypto as a genuine gift | Not taxable until you dispose of it | FAQ 75 |
| Soft fork, or hard fork with no new coins received | Not taxable | FAQs 103–104 |
Calculating Gain or Loss
The formula is the same as for any property:
Gain or loss = Amount realized − Adjusted basis
Basis is what the crypto cost you in U.S. dollars. If you bought it with cash, basis is the price plus purchase fees (FAQ 56). If you received it as income, basis is the dollar value you reported as income (FAQ 59).
Amount realized is what you got for it: cash received, or the fair market value of the crypto, goods or services you received, minus the fees of the sale (FAQs 52, 65, 66).
Fees are handled in a specific way (FAQs 53, 97–99):
- Fees to buy are added to basis. Fees to sell reduce the amount realized.
- When you swap coin A for coin B, the whole fee is charged against coin A. It cannot be added to the basis of coin B (FAQ 72).
- A fee paid in crypto is itself a disposal of that crypto, so it can create its own small gain or loss.
- A fee to move crypto between your own wallets is not a transaction cost, but paying it in crypto is still a disposal (FAQ 81).
When a value is unclear. If you cannot reliably value what you received, use the value of the crypto you gave up at that moment (FAQ 102).
Example. You buy 1 unit of coin A for $1,000. Three years later you swap it for 1 unit of coin B worth $3,000. You report a $2,000 long-term capital gain, and your basis in coin B is $3,000 (Form 8949 instructions, Example 5).
Holding Period, Tax Rates and Losses
How long you held the crypto decides the rate. The holding period starts the day after you acquire it and includes the day you dispose of it (FAQ 50).
| Held | Type | Federal rate |
|---|---|---|
| 1 year or less | Short-term | Your ordinary income tax rate |
| More than 1 year | Long-term | 0%, 15% or 20%, depending on taxable income (IRC §1(h)) |
| More than 1 year, NFT treated as a collectible | Long-term collectible | Up to 28% (IRC §1(h)(4); Notice 2023-27) |
Higher-income taxpayers may also owe the 3.8% net investment income tax on crypto gains (IRC §1411).
Capital losses. Losses first offset gains. If losses are larger, you can deduct up to $3,000 a year ($1,500 if married filing separately) against other income. The rest carries forward to future years with no time limit (IRC §§1211(b), 1212(b)).
Gains are taxed when realized, not when prices rise. Holding a coin that went up is not taxable. Selling or swapping it is.
Which Units Did You Sell? Wallet-by-Wallet Rules
If you bought the same coin at different prices, the units you are treated as selling decide your gain. Since Jan. 1, 2025, this is decided separately for each wallet or account. Units in one wallet cannot be matched against purchases held in another.
Default rule: first in, first out, per wallet. If you do not identify specific units, the earliest-acquired units in that wallet or account are treated as sold first. The purchase date counts, not the date the units arrived in the wallet (FAQs 86, 87, 92).
Specific identification lets you choose which units you sell (for example, the most expensive ones, to reduce gain). The requirements depend on where the crypto sits:
| Where the crypto is held | How to identify units | Source |
|---|---|---|
| Your own (unhosted) wallet | Record the units in your books by the time of sale (purchase date/time or price), and keep records showing they left that wallet | FAQ 82 |
| Hosted wallet of a provider that is not acting as your broker | Same as an unhosted wallet | FAQ 83 |
| Broker account, sales in 2025 | Your own records or a standing order in your records were enough (temporary relief) | Notice 2025-7; FAQs 84, 88 |
| Broker account, sales from 2026 | Tell the broker by the time of sale, using identifiers the broker accepts, or set a standing order with the broker | FAQs 85, 88 |
| Broker offers only one method | That method is treated as your standing order (from 2026) | FAQ 89 |
Transition safe harbor. Before 2025 many people used a "universal" method across all wallets. Rev. Proc. 2024-28 let eligible taxpayers make a reasonable allocation of their unused basis to the units held in each wallet as of Jan. 1, 2025 (FAQ 93).
One wallet is one wallet. Backing up all your private keys in one place does not merge your wallets into one for tax purposes (FAQ 96).
How Each Type of Crypto Is Taxed
Bitcoin, Ether and Other Coins
The standard rules above apply in full. Every sale, swap and spend is a disposal.
Stablecoins
A stablecoin is a digital asset and therefore property. Because its price stays near $1, gains and losses are usually tiny, but a swap into or out of a stablecoin is still a disposal. You must report it even if your broker sends no Form 1099-DA; the IRS says so directly about a stablecoin gain and loss that a broker did not report (FAQ 100). Under the broker rules, platforms may report qualifying stablecoin sales in aggregate and skip reporting below a de minimis threshold, which is one reason you may not see them on a 1099-DA (T.D. 10000).
NFTs
NFTs are digital assets and follow the same gain-and-loss rules. Under Notice 2023-27, the IRS uses a "look-through" test: if the NFT represents a collectible (such as a digital certificate for a gem, artwork or rare coin), the NFT is treated as a collectible. Long-term gains on collectibles can be taxed at up to 28%. NFT sales below $600 a year may not appear on a 1099-DA, but they are still reportable (FAQ 101).
Mining
Mined coins are income at their fair market value on the day you receive them (Notice 2014-21). If mining is a trade or business, the income goes on Schedule C and is subject to self-employment tax, and business expenses may be deductible. As a hobby, it goes on Schedule 1.
Staking
Under Rev. Rul. 2023-14, staking rewards are income in the year you gain dominion and control over them, meaning you can sell, exchange or transfer them. The amount is their fair market value at that moment. This applies whether you stake directly or through an exchange. The Tax Court reached the same conclusion in T.C. Memo. 2026-46.
Hard Forks, Soft Forks and Airdrops
Rev. Rul. 2019-24 and FAQs 103–107 set the rules:
- Soft fork (protocol change, no new coin): no income.
- Hard fork, but you received no new coins: no income.
- Hard fork or airdrop where you receive new coins you control: ordinary income equal to their fair market value when received, usually when the transaction is recorded on the ledger. That amount becomes your basis.
Getting Paid in Crypto
- Employees: crypto wages are wages. They are subject to withholding, FICA and FUTA and belong on Form W-2 (FAQ 61).
- Independent contractors: the dollar value is self-employment income on Schedule C (FAQ 60).
- In both cases, your basis in the coins equals the income you reported (FAQ 59).
DeFi: Wrapping, Liquidity Pools, Lending
This is the least settled area. Notice 2024-57 only says that brokers do not yet have to report wrapping and unwrapping, liquidity-provider transactions, staking, crypto lending, short sales and notional principal contracts. It does not say these transactions are tax-free, and the exception does not cover rewards you earn from them. The IRS has not issued specific guidance on their tax treatment. The general rule still applies: exchanging a digital asset for another that differs materially in kind or extent is taxable (FAQ 64). Get professional advice for large DeFi activity.
Crypto Futures and Perpetuals: U.S. Exchanges vs. Offshore Platforms Like Bybit
The same Bitcoin futures trade can fall under two very different sets of rules. It depends on where the contract trades and what kind of contract it is.
The special section 1256 regime applies only to "regulated futures contracts." Under IRC §1256(g)(1) and (g)(7), that means a contract marked to market daily and traded on a qualified board or exchange: an SEC-registered national securities exchange, a U.S. board of trade designated as a contract market by the CFTC, or another market the Treasury has specifically approved. The statute also excludes swaps and "similar agreements" (§1256(b)(2)(B)).
| Futures on a CFTC-designated U.S. exchange | Futures and perpetuals on an offshore platform (e.g., Bybit) | |
|---|---|---|
| Section 1256 contract? | Yes (regulated futures contract) | Generally no: the platform is not a qualified board or exchange |
| Character of gain or loss | 60% long-term / 40% short-term, whatever the holding period | Ordinary capital gain rules: short-term if held 1 year or less (nearly always) |
| Open positions at Dec. 31 | Marked to market and taxed as if closed | Generally taxed when the position is closed |
| Wash sale rule | Does not apply to year-end mark-to-market losses (§1256(f)(5)) | See the wash sale discussion below |
| Tax form from the platform | Form 1099-B | None: a foreign platform is not a U.S. broker |
| Where you report | Form 6781, then Schedule D (FAQ 51) | Form 8949 and Schedule D, from your own records |
Perpetual contracts are the least settled part. Perpetuals have no expiry and exchange periodic "funding" payments, so they look more like swaps than classic futures. The IRS has not published guidance on how perpetuals or their funding payments are taxed. Notice 2024-57 mentions notional principal contracts only to excuse brokers from reporting them. Keep a record of every funding payment paid and received, and get professional advice before filing.
Margin and settlement in crypto create their own events. Swapping BTC into USDT to post as margin is a crypto-to-crypto exchange, taxable under the normal rules (FAQ 64). Profits paid out in a coin or stablecoin give you that coin at its dollar value, which becomes your basis for its later sale.
No form does not mean no tax. U.S. citizens and residents are taxed on worldwide income. You must report gains and losses from a foreign platform even though it sends no Form 1099-DA or 1099-B (FAQ 108). For the foreign account itself, see the FBAR note below.
Access note. Bybit's own terms list the United States as an excluded jurisdiction where it does not offer services (Bybit, Service Restricted Countries). This matters most for people who traded there while living abroad and later became U.S. taxpayers, or who hold old accounts: the tax rules above still apply to that activity.
Gifts, Inheritances and Charitable Donations
Receiving a gift. A genuine gift of crypto is not income (FAQ 75). When you later sell it (FAQs 76–77):
- For figuring a gain, your basis is the giver's basis plus any gift tax the giver paid.
- For figuring a loss, your basis is the lower of the giver's basis or the value when you received it.
- If you have no record of the giver's basis, your basis is zero.
- Your holding period includes the giver's, if documented.
Giving a gift. Large gifts may require the giver to file Form 709, which also asks the digital asset question.
Inheriting crypto. Inherited property generally takes a basis equal to its fair market value at the date of death, and a sale is reported as long-term regardless of how long you held it (Form 8949 instructions).
Donating to charity (FAQ 78):
- Held more than 1 year: the deduction is generally the fair market value.
- Held 1 year or less: the deduction is generally the lower of your basis or fair market value.
- A deduction over $5,000 requires a qualified appraisal; over $500,000, the appraisal must be attached to the return. The IRS has confirmed the appraisal rule applies to crypto (CCA 202302012).
Where Crypto Differs from Stocks
Wash sales. The wash sale rule (IRC §1091) disallows a loss when you sell and rebuy within 30 days, but its text applies to "stock or securities." The IRS has not issued guidance applying it to cryptocurrency. Congress's own tax staff describe the current rule this way in explaining a pending bill that would extend wash-sale rules to digital assets (JCT, JCX-47-26). That bill is not law. A token that is itself a security, or a crypto ETF, can raise different issues.
Like-kind exchanges. Swapping one coin for another is not a tax-free like-kind exchange. The IRS concluded that Bitcoin, Ether and Litecoin were not like-kind to each other even under pre-2018 law (CCA 202124008); since 2018, section 1031 applies only to real property.
A price drop alone is not a deductible loss. If a coin has lost most of its value but still exists and can be sold, you cannot deduct the loss just because it fell. You realize the loss when you sell or otherwise dispose of it (CCA 202302011). Losses from theft, scams or failed platforms are fact-specific and heavily limited for individuals; see CCA 202444009 on rewards frozen by bankrupt platforms, and get professional advice.
Reporting on Your Return
The Digital Asset Question
Form 1040 (and 1040-SR, 1040-NR, 1041, 1065, 1120, 1120-S and 709) asks whether, during the year, you received a digital asset as a reward, award or payment, or sold, exchanged or otherwise disposed of one (IRS digital assets page).
- Yes: you received crypto as pay or rewards (including mining, staking, fork airdrops), or you sold, swapped, spent or gave it away, or paid a fee in crypto.
- No: you only held crypto, only bought it with dollars, or only moved it between your own wallets without paying fees in crypto.
Form 1099-DA
Custodial brokers (trading platforms, some hosted wallet providers, crypto ATMs and certain payment processors) issue Form 1099-DA. It shows gross proceeds for 2025 transactions and, for 2026 transactions, also basis for covered assets acquired in that account on or after Jan. 1, 2026. Decentralized, non-custodial platforms are not covered by these rules.
The form helps, but it is not the limit of what you owe. You must report every taxable transaction, whatever the amount and whether or not you get a form (FAQ 108).
Form 8949 and Schedule D
Sales and swaps go on Form 8949, then Schedule D. Starting with 2025 returns, digital assets use their own boxes, never A–F:
| Situation | Short-term | Long-term |
|---|---|---|
| 1099-DA shows basis reported to the IRS | Box G | Box J |
| 1099-DA received, basis not reported to the IRS | Box H | Box K |
| No 1099-DA received | Box I | Box L |
For each digital asset row, include the asset's name or symbol, the exact units, and the transaction ID if available. If every 1099-DA shows basis reported to the IRS and needs no adjustment, you may put the totals straight on Schedule D ("Exception 1"). Fees not reflected on the 1099-DA are adjusted with code E.
Other Forms
| Income type | Where it goes |
|---|---|
| Staking, hobby mining, fork and airdrop income | Schedule 1 (Form 1040) |
| Freelance or business crypto income, crypto dealing | Schedule C |
| Crypto wages | Form W-2 from your employer |
| Regulated crypto futures | Form 6781 (from Form 1099-B) |
| Large gifts of crypto | Form 709 |
| Non-cash charitable gifts | Form 8283 |
No tax is withheld on most crypto gains, so large gains or rewards may call for quarterly estimated tax payments.
Foreign Accounts, Scams and Record-Keeping
Foreign exchanges and FBAR. Under FinCEN Notice 2020-2, a foreign account holding only virtual currency is currently not reportable on the FBAR, unless it also holds reportable assets. FinCEN has said it intends to change this, so check the current rule before filing.
Scam alert. The IRS warns about fake letters with a QR code asking you to register crypto on a "Digital Assets Compliance Portal." The IRS does not require registration of digital assets and is not sending these letters.
What to keep (FAQ 95; IRS digital assets page):
- Date and time of every acquisition and disposal
- Asset name and exact number of units
- Fair market value in U.S. dollars at each transaction
- What you paid, including fees (your basis)
- Which wallet or account held the units, and transfers between your wallets
- Your specific-identification choices or standing orders
- Every Form 1099-DA, 1099-B, 1099-MISC and W-2
- For gifts: the giver's basis and dates
What May Change
On Sept. 16, 2026, the House Ways and Means Committee approved the Digital Asset Tax Certainty Act (H.R. 10357), which the chairman called the first tax framework for digital assets (Ways and Means; JCT description, JCX-47-26). Its proposals include a small exemption for network fees, wash-sale and constructive-sale rules for digital assets, rules for mining, staking and stablecoins, and a voluntary disclosure program.
It is a bill, not law. It still needs to pass the full House and Senate and be signed. Until then, everything above is the law in force.
Official Sources
This guide is general information, not tax advice for your situation. "FAQ" numbers refer to the IRS FAQs on digital asset transactions below.
Statutes and Regulations
- Infrastructure Investment and Jobs Act, Pub. L. 117-58 (IRC §6045 digital asset definition and broker reporting)
- T.D. 10000, final broker reporting regulations
- IRC §1256 (section 1256 contracts, qualified board or exchange)
IRS Guidance
- IRS Digital assets hub
- IRS FAQs on digital asset transactions (FAQs 47–111)
- Notice 2014-21, as modified by Notice 2023-34
- Rev. Rul. 2019-24 (hard forks, airdrops)
- Rev. Rul. 2023-14 (staking)
- Notice 2023-27 (NFTs as collectibles)
- Notice 2024-56, Notice 2024-57, Notice 2025-33 (broker relief)
- Notice 2025-7 (unit identification relief for 2025)
- Rev. Proc. 2024-28 (wallet-by-wallet transition)
- Instructions for Form 8949 (2025)
- CCA 202124008, CCA 202302011, CCA 202302012, CCA 202444009
- T.C. Memo. 2026-46 (staking rewards are income)
- FinCEN Notice 2020-2 (FBAR)