In the US, the IRS treats crypto as property, not currency. Buying crypto with dollars and holding it is not taxable on its own. Selling, swapping or spending it is a disposal that can create a capital gain or loss, and crypto received as pay or from mining or staking is taxed as ordinary income.
In the United States, crypto is taxed under one core rule: the Internal Revenue Service (IRS) treats digital assets as property, not currency. So many of the rules you may know from stocks also apply to bitcoin, ether and stablecoins. If taxes are new to you, start with our general primer, crypto taxes: what to know before you buy.
This guide covers the federal rules for US taxpayers as of September 2026: what is taxable, how a gain is worked out, which forms you use and which records to keep. It is general information, not tax advice. Your state may tax crypto too, and your own situation can change the answer, so check with a qualified tax professional before you file. Live in the UK? Read our UK crypto tax guide instead.
What counts as a digital asset for US tax?
For the IRS, a digital asset is any digital representation of value recorded on a cryptographically secured distributed ledger, such as a blockchain, or a similar technology. That covers cryptocurrencies like bitcoin and ether, stablecoins and non-fungible tokens (NFTs).
The IRS first said in Notice 2014-21 that virtual currency is treated as property for federal tax purposes, and its current guidance still does. Because crypto is property, you can make a gain or a loss each time you dispose of it, even when no dollars reach your bank account.
Form 1040 includes a digital asset question. It asks whether, at any time during the tax year, you received a digital asset as a reward, award or payment, or sold, exchanged or otherwise disposed of one. You answer it with Yes or No. The steps later in this guide explain which answer fits.
Is buying crypto taxable in the US?
No. Buying crypto with US dollars and holding it is not a taxable event. If that is all you did during the year, you answer No to the digital asset question. Moving crypto between wallets or accounts that you own is not taxable either.
Two details still matter from your first purchase:
- Your purchase sets your cost basis. What you paid in dollars, including fees, commissions and other acquisition costs, is the starting point for working out a gain or loss later.
- A fee paid in crypto counts as a disposal. If you pay a network fee in crypto when you move coins between your own wallets, the crypto used for the fee is treated as disposed of. That can create a small gain or loss.
Whichever kind of crypto wallet you use, keep your own note of what each purchase cost in dollars. You will need it when you sell.
Which crypto transactions are taxable?
Selling, swapping and spending crypto are taxable disposals, and receiving crypto as pay or as a reward is taxable income. The table shows how common transactions are usually treated under IRS guidance.
| Transaction | Taxable? | How it is usually taxed |
|---|---|---|
| Buying crypto with US dollars | No | Nothing to report yet; the cost becomes your basis |
| Moving crypto between your own wallets | No | Not taxable, unless you pay the network fee in crypto |
| Selling crypto for dollars | Yes | Capital gain or loss |
| Swapping one crypto for another, including stablecoins | Yes | Capital gain or loss on the crypto you gave up |
| Paying for goods or services with crypto | Yes | Capital gain or loss |
| Being paid in crypto for work | Yes | Ordinary income at its dollar value when received |
| Mining or staking rewards | Yes | Ordinary income at their dollar value when received |
| New coins received after a hard fork | Yes | Ordinary income at their dollar value when received |
| Receiving crypto as a genuine gift | No | No income until you sell or otherwise dispose of it |
Swaps catch many beginners out. No dollars reach your bank, but the IRS treats a swap as a disposal of the coin you gave up. What you received is measured by the dollar value of the new crypto at the time of the swap.
How do you work out a crypto gain or loss?
Subtract your cost basis from what you received. Your cost basis is what you paid for the crypto in dollars, including fees, commissions and other acquisition costs. What you received is the dollar amount of a sale, or the dollar value of the crypto, goods or services you got in exchange. Certain selling costs can reduce that amount.
A simple, made-up example: you buy crypto for $1,000 and pay a $20 fee, so your cost basis is $1,020. Two years later you sell all of it for $1,500. Your gain is $1,500 minus $1,020, which is $480. You held it for more than one year, so it is a long-term gain.
If you sell for less than your cost basis, you have a capital loss instead. The same sum works for a swap: use the dollar value of the crypto you received in place of the sale price.
Which units count when you sell part of your crypto?
By default, the IRS treats the earliest units you acquired as the first ones sold. This is called first in, first out (FIFO). You can pick specific units instead, for example ones bought at a higher price, if you identify them no later than the time of the sale and keep records that prove their cost basis.
Since January 1, 2025, this matching works wallet by wallet. Units are matched within the wallet or account they leave, not across all your holdings. For crypto a broker holds for you, sales from 2026 onward need your choice of units to be given to the broker by the time of the sale.
If you kept one combined record for all your wallets before 2025, IRS Revenue Procedure 2024-28 explains how to allocate that cost basis to each wallet or account. This is one area where crypto tax software or a tax professional can save a lot of time.
What tax rates apply to crypto gains?
The rate depends on how long you held the crypto before you disposed of it. As of September 2026, the federal rules are:
- Held for one year or less: a short-term gain, taxed as ordinary income at the same graduated rates as your other income, such as wages.
- Held for more than one year: a long-term gain, usually taxed at 0%, 15% or 20%, depending on your taxable income and filing status.
The income limits for each long-term rate change every year. IRS Topic 409, listed in the sources below, gives the current figures. A few kinds of assets, such as collectibles, can be taxed at a higher long-term rate, and some people with higher incomes also owe the net investment income tax.
Losses help too. Capital losses first offset capital gains. If your losses are larger, you can deduct up to $3,000 of the net loss from other income each year, or $1,500 if you are married filing separately. Any loss left over carries forward to later years.
How is crypto income taxed?
Crypto you receive as payment or as a reward is ordinary income. You count its fair market value in US dollars at the time you receive it, and that value becomes your cost basis if you later sell or swap it.
- Wages from an employer: crypto paid as wages is subject to income tax withholding and payroll taxes, and it is reported on Form W-2, like cash wages.
- Payment as an independent contractor: the dollar value is self-employment income, so self-employment tax applies as well.
- Mining and staking rewards: taxed as income at their dollar value when you receive them. For staking, that is when you gain control of the rewards, meaning you can sell or transfer them. New to staking? Read what proof of stake is.
- Coins from a hard fork: new coins you receive after a blockchain fork, often through an airdrop, are income at their dollar value when you receive them. A fork that gives you no new coins is not income.
Most people report this income on Schedule 1 (Form 1040). If your crypto activity is a business, it goes on Schedule C instead.
How do you report crypto on your federal tax return?
Answer the digital asset question, list each disposal on Form 8949, carry the totals to Schedule D and report any crypto income on the right schedule. In order:
- Answer the digital asset question. Check Yes if you sold, swapped, spent or received crypto during the year. Check No if you only held it, only bought it with dollars or only moved it between your own wallets without paying a fee in crypto.
- List each disposal on Form 8949. Since the 2025 tax year, the form has separate boxes for digital assets: G, H or I for short-term and J, K or L for long-term transactions.
- Carry the totals to Schedule D (Form 1040). This is where your short-term and long-term gains and losses come together.
- Report crypto income. Use Schedule 1 (Form 1040) for most mining, staking and fork income, or Schedule C if it is business income.
- Report large gifts. If your gifts to one person (other than your spouse) during the year are worth more than the annual gift tax exclusion, which is $19,000 for 2025 and for 2026, you file Form 709.
- File on time. Returns for a calendar year are generally due on April 15 of the next year, or the next business day if the 15th falls on a weekend or legal holiday. An extension on Form 4868 gives you more time to file, not more time to pay.
What is Form 1099-DA?
Form 1099-DA is the form US brokers use to report your digital asset sales to you and to the IRS. Brokers must report gross proceeds for sales on or after January 1, 2025. For sales from January 1, 2026, they must also report cost basis in some cases, generally for crypto acquired after 2025 in an account where the broker held it for you and kept there until it was sold.
What this means for you:
- You still report everything. You must report all crypto income, gains and losses on your return whether or not you receive a Form 1099-DA.
- The cost basis may be missing. For crypto bought before 2026, or moved in from another wallet, the form may show what you received but not what you paid. You work out the basis from your own records before you file.
- Errors can be corrected. If a form looks wrong, ask the issuer for a corrected one. The issuer is named in the “Filer” box at the top left of the form.
- Not every platform is a broker. Whether a particular platform sends you a Form 1099-DA depends on its role under the IRS rules, so check with each platform you use.
What records should you keep?
Keep a record of every purchase, sale, swap, transfer and reward. The IRS expects your records to support the figures on your return, including receipts, sales, exchanges, other disposals and transfers, and the fair market value at the time. For each transaction, note:
- the date and time
- the type of crypto and the number of units
- the value in US dollars at the time, and where that value came from
- any fees, and whether you paid them in dollars or in crypto
- the wallet or account the transaction happened in
- supporting documents, such as order confirmations, account statements and exported transaction histories
A spreadsheet works if you have only a few transactions. If you trade often or use several wallets, crypto tax software or an accountant can do the matching. Download your transaction history from each platform you use regularly, not only at tax time.
What other rules affect crypto buyers?
Taxes are one of several sets of rules around crypto. Identity checks are covered in our main guide to KYC and crypto. The rules on passing sender and recipient details between crypto providers are explained in what the crypto travel rule is.
For how US agencies have classified bitcoin over the years, see our earlier blog post on bitcoin taxes in the USA. It was written in 2019, so rely on this guide for current forms and rates.
Sources
- IRS: Digital assets (updated September 2026) (checked September 2026)
- IRS: Frequently asked questions on digital asset transactions (updated June 2026) (checked September 2026)
- IRS Notice 2014-21: virtual currency treated as property (March 2014) (checked September 2026)
- IRS Topic 409: Capital gains and losses (checked September 2026)
- IRS: Instructions for Form 8949 (2025) (checked September 2026)
- IRS: Understanding your Form 1099-DA (updated June 2026) (checked September 2026)
- IRS: Instructions for Form 1099-DA (2026) (checked September 2026)
- IRS Revenue Procedure 2024-28: allocating cost basis to wallets and accounts (checked September 2026)
- IRS Revenue Ruling 2023-14: staking rewards (checked September 2026)
- IRS Revenue Ruling 2019-24: hard forks and airdrops (checked September 2026)
- IRS: Frequently asked questions on gift taxes (checked September 2026)
- IRS: When to file (checked September 2026)
