Crypto Taxes in 2026: What You Need To Know

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Crypto might feel new and digital, but when it comes to taxes, the IRS treats it like any other asset — it’s taxable in the U.S. And it’s not just selling your coins for cash that can create a tax bill. Trading one token for another, using crypto to buy something, earning staking rewards or getting paid in crypto can all trigger taxes. How much you owe depends on what you did with it and how long you held it, since short-term and long-term gains are taxed differently. With new reporting rules rolling out and exchanges sharing more information with the IRS, keeping clear, accurate records matters more than ever.

Is Cryptocurrency Taxable?

Cryptocurrency is taxable in the U.S. The IRS treats digital assets as property — not currency — which means they’re taxed similarly to stocks or real estate.

That distinction matters. Because crypto is considered property, taxes can apply whenever you sell it, trade it, or use it to buy something — even if you never convert it into U.S. dollars. In other words, simply moving in and out of different coins or spending crypto can trigger a taxable event, depending on the circumstances.

What Crypto Transactions Actually Trigger Taxes?

The easiest way to stay on the IRS’s good side — and avoid overpaying — is to understand which crypto moves count as taxable events and which don’t. Not every action creates a tax bill, but more of them do than many investors expect.

A simple rule of thumb: If you dispose of crypto or receive it as income, it’s probably taxable.

Crypto Moves That Usually Trigger Taxes

These actions typically result in capital gains tax or income tax:

• Selling crypto for cash
• Trading one cryptocurrency for another
• Spending crypto on goods or services
• Earning crypto through staking or mining
• Receiving airdrops or crypto rewards
• Getting paid in crypto
• Selling or trading NFTs

In these situations, you may owe capital gains tax if your crypto increased in value, or income tax if you received crypto as compensation or rewards.

Crypto Moves That Don’t Trigger Taxes on Their Own

Some common actions are not taxable by themselves:

• Buying crypto with U.S. dollars (or other fiat currency)
• Transferring crypto between wallets you own
• Holding crypto without selling or trading it

These activities don’t create a tax bill at the time they happen. However, once you sell, trade or spend that crypto, taxes may apply based on how much its value has changed.

Here’s Where People Get tripped Up

Even “spending” crypto — like using Bitcoin to buy a laptop — is considered a disposal. If your crypto increased in value since you acquired it, you could owe capital gains tax on that difference.

How Crypto Is Taxed: Capital Gains Vs. Income

How your crypto is taxed depends on how you use it. If you sell, trade or spend it, you’re usually dealing with capital gains tax. If you earn it — through staking, mining or getting paid in crypto — it’s typically taxed as ordinary income. The same asset, two very different tax treatments.

When Crypto Is Subject To Capital Gains Tax

Capital gains tax applies when you dispose of crypto. That includes selling it for cash, trading it for another token or even using it to buy something.

The basic formula is simple:

Sale price – Cost basis = Capital gain (or loss)

Your cost basis is what you originally paid for the crypto, including fees.

Here’s What That Looks Like In Real Life

If you buy a token for $100 and later sell it for $120, you have a $20 capital gain.

If you buy it for $100 and sell it for $80, you have a $20 capital loss. That loss can help offset other gains when you file your taxes.

It’s not just cashing out that counts. Swapping Bitcoin for Ethereum or using crypto to book a flight can also trigger capital gains tax if the value increased.

When Crypto Is Taxed As Ordinary Income

Crypto is taxed as ordinary income when you receive it as compensation or rewards.

This typically includes:

• Staking rewards
• Mining income
• Airdrops
• Crypto received as payment for work or services

In these cases, the fair market value of the crypto on the day you receive it is considered taxable income.

And here’s where it gets layered: if you later sell that same crypto, you could also owe capital gains tax on any increase in value after you received it.

Short-Term Vs. Long-Term Crypto Taxes

How long you hold crypto before selling it can make a big difference in what you owe.

If you hold crypto for less than one year, any gain is taxed as short-term capital gains, which are taxed at your ordinary income tax rate — up to 37%, depending on your tax bracket.

If you hold crypto for more than one year, your gains qualify for long-term capital gains rates, which are generally lower — ranging from 0% to 20%, depending on your income.

That’s why holding longer can sometimes significantly reduce your tax bill. Timing doesn’t just affect market returns — it can affect what you keep after taxes, too.

Why Cost Basis Can Make Or Break Your Crypto Tax Bill

Cost basis might sound technical, but it’s one of the most important numbers in your entire crypto tax picture. It’s simply what you originally paid for your crypto, including certain fees — and it’s the number the IRS uses to calculate your gain or loss when you sell, trade or spend it.

If your records aren’t accurate, your tax bill can easily be higher than it should be.

What You Should Be Tracking

To calculate gains correctly (and avoid overpaying), keep detailed records of:

• Purchase date
• Purchase price
• Fair market value at the time of each transaction
• Transaction fees
• The wallet or exchange used

The more active you are — especially if you’re moving crypto between platforms — the more important this becomes.

Here’s Where People Get Burned

If you can’t document your cost basis, the IRS may treat it as zero. That means the entire sale amount could be considered taxable gain — not just the profit.

Poor record-keeping can also cause you to miss out on capital losses that could offset gains and lower your tax bill. And in crypto, those swings can add up quickly.

A Smart Move Before Tax Season

Download and export transaction histories from every exchange and wallet you use — not just the one you use most often. Keeping everything in one place now can save you serious stress (and money) later.

New Crypto Tax Reporting Rules: What’s Changing In 2026 And Beyond

Crypto reporting is getting a lot more structured — and a lot more visible to the IRS. Starting with tax year 2025, brokers must issue a new form called Form 1099-DA (Digital Asset Proceeds From Broker Transactions) to report certain crypto transactions. That form is sent to investors (and the IRS) if you sold, traded or used digital assets through a broker beginning Jan. 1, 2025.

You can expect to receive Form 1099-DA if you:

• Sold or traded digital assets through an exchange or broker
• Used crypto to purchase something significant, like real estate
• Traded stablecoins or NFTs through a digital asset broker

In short: if a broker is involved, reporting likely is too.

What Brokers Must Report Right Now

Under the current rollout, brokers are required to:

• Review and reconcile transactions across accounts, wallets and exchanges
• Apply standard cost basis methods
• Accurately categorize proceeds and income

This is part of a broader effort to standardize crypto tax reporting and reduce underreporting.

What’s Expanding In 2026

The rules don’t stop there. Beginning in 2026, additional reporting requirements will phase in, with expanded details appearing on updated Form 1099-DA forms issued in early 2027.

Brokers will begin reporting:

• Cost basis
• Wallet addresses and transaction identifiers
• Sale and acquisition dates
• Fair market value of the asset

That means the IRS will have significantly more visibility into how, when and for how much you acquired and disposed of digital assets.

What This Means For You

Even with expanded broker reporting, you’re still responsible for filing your return accurately and on time. If there are gaps, errors or missing cost basis information, it’s up to you to reconcile them.

It’s also important to note that these rules generally apply to custodial brokers — platforms that hold or control your digital assets. Non-custodial or decentralized platforms that never take possession of your crypto may not fall under the same reporting requirements.

Crypto tax reporting is becoming more formal and more transparent. Clean records and proactive tracking are essential.

Special Crypto Tax Situations That Catch People Off Guard

Not all crypto activity fits neatly into “capital gains” or “income.” Some transactions come with extra rules — and those details can meaningfully affect what you owe. If you stake, mine, trade tokens directly or deal in NFTs, it’s worth understanding how the IRS treats each scenario.

Here’s how some of the most common situations work.

Staking Rewards

Staking rewards are taxed as ordinary income when you receive them, based on their fair market value that day.

If you later sell those rewards, you may also owe capital gains tax on any increase in value after you received them. So yes — staking can trigger two layers of tax over time.

Mining Crypto

Mining rewards are also taxed as ordinary income when received. But how you report them depends on whether you mine as a hobby or as a business.

• Hobby miners generally report income on Schedule 1 as “other income.”
• Business miners report income and expenses on Schedule C.

The difference matters. Business miners can deduct ordinary and necessary expenses, but they’re also subject to self-employment tax. Hobby miners avoid self-employment tax but generally can’t deduct expenses in the same way.

Crypto-To-Crypto Trades

Trading one cryptocurrency for another is always a taxable event.

Even if no cash changes hands, the IRS treats the trade as if you sold the first asset at its fair market value. Any gain or loss is calculated at the moment of the swap.

This is one of the most commonly misunderstood rules in crypto.

NFTs And Other Digital Assets

The IRS generally treats NFTs and similar digital assets like cryptocurrency for tax purposes. Buying and selling NFTs can trigger capital gains.

However, the tax treatment may differ depending on your role:

• Creators may report proceeds as business income.
• Investors or collectors typically deal with capital gains rules when they sell.

The details can vary depending on how the activity is structured.

Gifts And Charitable Donations

Gifting crypto is usually not a taxable event for the person giving it.

Donating crypto to a qualified charity may even provide a tax deduction, depending on how long you’ve held it and other factors.

However, the recipient of a gifted asset may owe taxes if they later sell it, based on the original cost basis and holding period.

Common Crypto Tax Mistakes And How To Avoid Them

Crypto taxes aren’t usually derailed by one big error. It’s the small oversights that add up. Missing a wallet, forgetting a reward or trusting one platform’s numbers without double-checking can quietly inflate your tax bill — or trigger headaches later.

A little organization now can save a lot of stress at filing time.

Here are some of the most common (and costly) mistakes:

• Forgetting to report staking or rewards. Staking, mining and airdrops are taxable income when received — even if you never sell.
• Ignoring crypto you spent. Using crypto to buy goods or services is still considered a disposal and can trigger capital gains tax.
• Missing transactions from multiple wallets. If you use more than one exchange or wallet, you’re responsible for consolidating everything.
• Relying on just one exchange’s tax tools. Exchanges don’t always have your full transaction history — especially if you transfer assets in or out.
• Losing track of cost basis. Without accurate cost basis records, you could end up overpaying.

A smart habit: export transaction histories from every exchange and wallet you use, and review Form 1099-DA carefully for accuracy before filing.

Tools That Can Make Crypto Taxes Easier

If your crypto activity goes beyond a few simple buy-and-sell transactions, dedicated crypto tax software can save time and reduce errors.

Some platforms specialize in digital asset reporting, including:

• CoinTracker
• CoinLedger
• Summ
• Koinly

Mainstream tax software providers like TurboTax also integrate crypto reporting features into their platforms.

If you only made a handful of straightforward transactions, a well-organized spreadsheet might be enough. But if you’ve traded frequently, staked, minted NFTs or moved assets across platforms, crypto-specific software can help:

• Aggregate transactions across wallets and exchanges
• Apply cost basis methods
• Generate the appropriate tax forms
• Flag inconsistencies

That said, software is only as accurate as the information you enter. Even the best platform can’t fix missing records or incorrect inputs.

If your situation feels complex — or you’re unsure how certain transactions should be categorized — it may be worth consulting a tax professional who specializes in digital assets.

End-Of-Year Crypto Tax Checklist

Before you file, make sure you’ve gathered everything. This quick checklist can help you avoid last-minute scrambling:

• Exchange transaction histories
• Wallet transaction data
• Cost basis documentation
• Records of staking or mining income
• NFT purchase and sale details
• Donation or gift documentation
• Prior-year capital loss carryforwards

Crypto tax reporting is becoming more detailed and more visible. Staying organized throughout the year — not just in April — is one of the smartest moves you can make.

State Crypto Tax Rules And What’s Changing Next

Federal tax rules apply to everyone, no matter where you live — but state taxes can add another layer. Some states follow federal treatment closely, while others have their own rules around income, capital gains or deductions. And if you live in a state with no income tax, that can change your overall picture significantly.

The important thing to remember is this: crypto isn’t taxed in a vacuum. Your state of residence can affect how much you ultimately owe.

Because digital asset regulation is still evolving, state guidance can shift. If you actively trade, stake or mine crypto, it’s worth checking your state’s current tax treatment each year instead of assuming nothing has changed.

The Bottom Line On Crypto Taxes

Crypto taxes aren’t optional — but they are manageable with the right approach. Most problems happen when investors underestimate how many actions trigger taxes or fail to keep organized records.

The fundamentals are straightforward:

• Know what counts as a taxable event
• Track your cost basis carefully
• Report income and gains accurately
• Review any tax forms you receive for errors

With expanded reporting rules and more visibility into digital asset transactions, there’s less room for guesswork than there used to be. The good news? A little planning throughout the year can prevent last-minute stress — and costly surprises — when it’s time to file.

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