How Crypto Is Taxed in the US: The Basics for 2026

You bought some bitcoin a few years ago, swapped a little for ether, earned a few tokens from staking and maybe paid for something online with a stablecoin. Now tax season is coming and your exchange has emailed you a form you’ve never seen before. Do you owe anything? On which transactions?

The short version: in the US, crypto is taxed like property, so many everyday crypto moves are taxable even when you never cash out to dollars. This guide covers the basics: which events count, how gains and income are calculated, the forms involved and what changed with the new broker reporting rules.

This is general information, not tax or legal advice. Crypto tax situations get complicated quickly, so talk to a CPA or enrolled agent about your own return.

The core rule: crypto is property

Since IRS Notice 2014-21, the IRS has treated virtual currency as property for federal tax purposes. Its current guidance uses the broader term “digital assets,” which covers cryptocurrencies, stablecoins and NFTs.

Being property, not currency, has 2 big consequences:

1. Every disposal is a sale. When you sell, trade or spend crypto, you compare what you got (in US dollars) with what you paid. The difference is a capital gain or loss, just like selling a stock.
2. Crypto you receive as income is taxed at its fair market value. If you’re paid in crypto, or receive it as a reward, you report its dollar value on the day you receive it as ordinary income. That value also becomes your cost basis for when you later sell it.

The IRS also says digital asset transactions must be reported whether or not they produce a gain. A loss still goes on your return.

Taxable events vs. non-taxable events

Here’s where most people get surprised. Swapping one coin for another is a taxable disposal, even if you never touched dollars.

Staking deserves a closer look. In Revenue Ruling 2023-14, the IRS said a cash-method taxpayer who receives staking rewards must include their fair market value in income in the year they gain “dominion and control” over them. That applies whether you stake directly or through an exchange.

Key takeaway: The question is not “did I cash out?” but “did I dispose of crypto or receive new crypto?” A coin-to-coin swap, a purchase with crypto and a staking reward are all reportable events.

How capital gains on crypto are calculated

The math is the same as for stocks:

Proceeds (dollar value received) minus cost basis (what you paid, including fees) = gain or loss

Then holding period decides the rate:

• Short-term: held 1 year or less. Taxed at your ordinary income tax rates.
• Long-term: held more than 1 year. Taxed at the long-term capital gains rates of 0%, 15% or 20%, depending on your taxable income and filing status.

Higher earners may also owe the 3.8% net investment income tax on top. And the IRS has said in Notice 2023-27 that some NFTs may be treated as collectibles, which can carry a higher maximum long-term rate.

If your losses exceed your gains for the year, you can deduct up to $3,000 of net capital loss against other income ($1,500 if married filing separately), and carry the rest forward to future years, according to IRS Topic 409.

Which coins did you sell?

If you bought the same coin at different prices, the units you’re treated as selling change your gain. The IRS lets you specifically identify which units you sold if you can document them. Otherwise a default first-in, first-out (FIFO) rule applies.

For transactions from January 1, 2025, the rules got stricter. Basis must be tracked wallet by wallet (or account by account), not across your entire holdings. Revenue Procedure 2024-28 gave taxpayers a way to allocate their existing basis to each wallet as of January 1, 2025. If you hold crypto at a broker and want to pick specific units, you generally need to tell the broker by the time of the sale.

The IRS forms you’ll deal with

The yes/no question on Form 1040

The IRS asks every filer whether, during the year, they received digital assets as a reward, award or payment, or sold, exchanged or otherwise disposed of digital assets. Answer “yes” if any of that happened. You can answer “no” if all you did was buy crypto with dollars, hold it, or move it between your own wallets (unless you paid a fee in crypto).

Form 1099-DA: brokers now report to the IRS

This is the biggest change in years. Custodial crypto brokers, such as centralized exchanges, certain hosted wallet providers, crypto kiosks and some payment processors, must now file Form 1099-DA:

• Gross proceeds are reported for sales on or after January 1, 2025. That means the first forms arrived in early 2026 for the 2025 tax year.
• Cost basis is reported for certain sales on or after January 1, 2026, generally for “covered” assets acquired on or after that date and kept with the same broker.

According to the IRS, decentralized, non-custodial platforms are not covered by these rules. Certain activity, such as staking, lending and wrapping, is temporarily excluded from 1099-DA reporting. Stablecoin and NFT sales can be reported in aggregate above certain thresholds.

A missing 1099-DA doesn’t mean a transaction isn’t taxable. You still owe tax on DeFi trades, peer-to-peer sales and transfers your broker can’t see. And for 2025 forms, many will show proceeds without basis, so it’s on you to supply accurate basis on Form 8949. Otherwise it can look like your entire sale was profit.

If you also get paid through apps like PayPal or Venmo, the separate 1099-K rules apply. See our guide to Venmo and PayPal taxes and Form 1099-K.

Common crypto tax mistakes

• Treating swaps as tax-free. A trade from one token to another is a disposal.
• Forgetting small purchases. Spending crypto on a gift card or a subscription is a sale.
• Ignoring reward income. Staking, interest-like rewards and airdrops are income when received, even if the token later loses value.
• Double counting. Moving coins between your own wallets isn’t a sale, but some software reads it as one if you don’t import every wallet.
• Missing basis. Coins moved from one exchange to another often arrive without basis history. Keep your own records.
• Assuming the wash sale rule applies or doesn’t. The current wash sale rule in the tax code covers stocks and securities. Direct crypto holdings are treated as property, and as of October 2026 Congress had not passed a law extending the rule to them, though proposals keep resurfacing. Check current law before you harvest losses.

Where to start: a 6-step crypto tax checklist

1. Gather every account. List each exchange, wallet and app you used during the year, including ones you closed.
2. Download transaction histories. Export CSV files or connect accounts to crypto tax software. Collect any Form 1099-DA, 1099-MISC or 1099-K you receive.
3. Fix your cost basis. Match transfers between your own wallets so they don’t look like sales, and fill in purchase prices for coins that arrived without basis.
4. Separate income from gains. Tag staking, mining, airdrops and crypto payments as income, valued in dollars on the day received.
5. Fill in Form 8949 and Schedule D. Most tax software generates these from your transaction file. Compare totals with your 1099-DA.
6. Plan for next year. If you earn crypto income regularly, you may need to make quarterly estimated payments. Our guide on how to pay quarterly estimated taxes online walks through it.

Keep records of every acquisition and disposal, including date, amount, dollar value and fees. The IRS asks you to keep records that support your return, and crypto platforms can shut down or delete histories.

Crypto taxes for businesses and freelancers

If you accept crypto as payment, you have income equal to its fair market value when you receive it, reported on Schedule C for most sole proprietors. When you later sell or spend that crypto, you also have a capital gain or loss based on the change in value since you received it.

Freelancers paid in crypto may also owe self-employment tax. If you’re weighing worker classification, our explainer on 1099 contractors vs. W-2 employees covers the basics. Businesses holding crypto on their books should involve an accountant early, since recordkeeping and valuation take real effort.

It also helps to understand the bigger picture: who regulates crypto in the US, and how tokenized assets like stocks and bonds on a blockchain may be taxed differently. Our guide to real-world asset tokenization explains that trend.

Watch out for crypto tax scams

Fake “tax” or “withdrawal fee” demands are a classic sign of an investment scam. Legitimate exchanges don’t make you pay taxes to them before you can withdraw, and the IRS doesn’t demand payment in crypto. If someone asks you to pay a “tax” in crypto to release your funds, read our guide on how to avoid crypto scams.

The bottom line

Crypto taxes come down to 2 ideas: disposals create gains or losses, and crypto you receive is income. With brokers now filing Form 1099-DA, the IRS sees more of your activity than ever, so accurate records matter. Track your basis by wallet, report reward income when you receive it, and bring in a tax professional if you have DeFi, business or high-volume activity. For definitions of terms like cost basis and stablecoin, see our glossary.

Sources

• IRS: Digital assets — property treatment, taxable events, forms, the Form 1040 question and Form 1099-DA timeline
• IRS: Instructions for Form 1099-DA — broker reporting of gross proceeds and basis, covered vs. noncovered assets
• IRS: Frequently asked questions on digital asset transactions — specific identification and default rules for 2025 and later
• IRS: Revenue Ruling 2023-14 — staking rewards included in income when taxpayer gains dominion and control
• IRS: Revenue Procedure 2024-28 — allocating basis to wallets and accounts as of January 1, 2025
• IRS: Topic no. 409, Capital gains and losses — holding periods, long-term rates and the $3,000 loss limit