How Is Crypto Taxed in the US? Rates, Rules & Reporting (2026)
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If you have been following crypto news lately, you may have seen headlines suggesting Trump has changed the rules on crypto taxes. He has not. The IRS still taxes crypto as property, every disposal is still a taxable event, and your reporting obligations are unchanged. Below, everything you need to know about how crypto is taxed in the US in 2026.
How is Crypto Taxed in the US?
In the US, crypto is taxed in two ways:
- Capital gains tax when you dispose of crypto
- Income tax when you earn crypto
Almost every crypto tax question comes back to one of these two categories. If you own crypto and get rid of it, you are dealing with capital gains tax on crypto. If you receive crypto as payment, rewards, or interest, it is taxed as ordinary income.
Everything in this guide follows IRS Digital Assets tax rules. As founder of CountDeFi and a registered Tax Professional, I have written this to be accurate, current, and clear.
The IRS Digital Income Tax Rule
The IRS first established its position on digital assets in Notice 2014-21, which confirmed that cryptocurrency is treated as property for federal tax purposes. That foundational rule has been expanded through Revenue Ruling 2023-14 on staking, the broker reporting regulations under the Infrastructure Investment and Jobs Act, and the introduction of Form 1099-DA for the 2025 tax year. Collectively these form the IRS digital income tax framework that governs every crypto transaction a US investor makes today.
Do You Pay Capital Gains Tax on Crypto?
Yes. In the US, capital gains tax on crypto applies when you dispose of crypto you own. A disposal means crypto leaves your ownership or changes hands. If you make a profit on a disposal, that profit may be taxable. If you make a loss, that loss can usually be used to offset other taxable gains.
A disposal that triggers capital gains tax on crypto includes:
- Selling crypto for USD or another fiat currency
- Trading one crypto for another (Bitcoin to Ethereum, for example)
- Spending crypto on goods or services
Every disposal and its resulting capital gain or loss must be reported to the IRS on Form 8949 and Schedule D (Form 1040).
When Do You Pay Income Tax on Crypto?
Income tax applies any time you earn crypto under IRS digital income tax rules. This includes straightforward situations like receiving a salary in Bitcoin, and less obvious ones like DeFi rewards.
Crypto treated as income includes:
- Getting paid in crypto
- Mining rewards
- Staking rewards
- Airdrops
- Referral bonuses
- Interest from crypto lending
- Earning tokens through DeFi protocols
- GameFi and play-to-earn rewards
To the IRS, crypto rewards are a form of income regardless of how passive they feel to you. Crypto rewards are taxed at your ordinary income rate in the year you receive them.
At tax time, crypto income is reported on IRS Schedule 1 (Form 1040) or Schedule C (Form 1040).
How Much Tax Do You Pay on Crypto? (2026 Rates)
This is the big question, and in practice, there’s no single tax rate. The internet is full of so-called crypto tax calculators, but in my experience, these are assuming that there's a fixed crypto tax rate, when in fact your crypto tax bill depends on several moving parts.
Instead, what you owe depends on how much you earn overall, the type of transactions you made, the state you live in, and how long you held your crypto. At CountDeFi, when we work through a client's tax position, we look at:
- Short-term capital gains: taxed at your federal and state income tax rate
- Long-term capital gains: taxed at the federal capital gains rate and your state rate
- Crypto income (staking, mining, a
Short-term vs long-term crypto taxes
Holding period is one of the biggest factors in your crypto tax bill.
- Crypto held for one year or less: any profit is taxed as a short-term capital gain, at your ordinary income rate.
- Crypto held for more than one year: any profit may qualify as a long-term capital gain, taxed at lower rates.
The clock starts when you acquire the crypto and resets every time you buy, earn, or receive new tokens. Each disposal is assessed separately.
Federal Income Tax Rates (Short-Term Gains and Crypto Income)
Here is the first set of rates we look at when determining our client's 'crypto tax rate'. These rates are set by the IRS each financial year and apply to short-term capital gains (for crypto held less than a year) and crypto income. This table describes the rates that apply to income and gains earned in 2025 but reported reported by April 2026.
Capital Gains Tax Rates 2026 (Long-Term Gains)
Now to the second set of rates. These IRS rates apply to crypto held for more than one year. This table describes the rates that apply to income and gains earned in 2025 but reported by April 2026.
Is There a Way to Pay No Tax on Crypto?
There is no legal way to avoid crypto tax entirely in the US. However, there are legitimate strategies that reduce what you owe:
- Hold for more than one year to qualify for lower long-term capital gains rates
- Harvest losses to offset gains elsewhere in your portfolio
- Time disposals around your income bracket
- Use the $3,000 annual deduction for net capital losses against ordinary income
These strategies work, but they require accurate records and precise calculations. CountDeFi builds the data foundation that makes legal tax minimisation possible.
Are Crypto Losses Tax Deductible?
Yes. If you dispose of crypto at a loss, that loss can offset capital gains elsewhere in your portfolio. If your total losses exceed your total gains, you can deduct up to $3,000 against ordinary income per year. Any remainder carries forward to future tax years.
This is one of the most underused tools in crypto tax planning, but it only works if every loss is accurately documented and reported.
Got missing crypto trading data? CountDeFi can find or reconstruct accurate trading records for you. Find out how we handle missing or messy crypto transaction data for tax purposes.
When Do You Pay Taxes on Crypto?
Crypto taxes in the US are reported as part of your annual tax return.
- Standard filing deadline: April 15, 2026 (Tax Day)
- Americans living abroad: June 15, 2026
- Extension deadline: October 15, 2026 (extension request must be filed by April 15)
An IRS filing extension gives you more time to file your return, not more time to pay. Any tax owed is still due by April 15. My IRS crypto tax extension guide shows you how to apply for an extension.
Do Some People Pay Crypto Tax Earlier?
Yes. If you earn significant crypto income from staking, mining, DeFi, or frequent trading, you may be required to make quarterly estimated tax payments. Estimated tax deadlines are:
- April 15
- June 15
- September 15
- January 15 (following year)
If you do not prepay enough, the IRS may charge underpayment penalties even if you pay in full by April.
How to Report Crypto on Your Taxes
When you file your US tax return, crypto is reported in specific places on your income tax formsL
Step 1: Answer the digital assets question on Form 1040
If you sold, exchanged, or otherwise disposed of a digital asset during the year, you must answer Yes to the question on Form 1040.
Step 2: Report disposals on Form 8949 and Schedule D
Every sale, trade, or spend is listed here with proceeds, cost basis, and resulting gain or loss.
Step 3: Report crypto income on Schedule 1 or Schedule C
Staking rewards, mining income, airdrops, and other crypto earnings go on IRS Schedule 1 or Schedule C.
Most taxpayers never fill in these forms manually. Tax software or a crypto tax CPA or accountant generates them automatically based on your transaction data. The key is making sure that transaction data is complete and accurate before you file.
How to Get the Data and Calculations You Need
To complete your crypto tax forms, you need a full record of your transactions and accurate calculations for gains, losses, and income. There are a few common ways people get this data.
1. Use Crypto Tax Software
Most people start with crypto tax software, which connects to exchanges and wallets to pull in transaction data automatically. The software then applies the tax rules to calculate capital gains, losses, and income, and outputs the figures needed for your tax return. This works well for straightforward activity, as long as the data is complete and consistent. When your trading activity is complex, your records are patchy, or you are deep into DeFi, crypto tax software has limitations.
2. Export and Calculate Manually
Some investors download transaction histories from exchanges and calculate gains manually in spreadsheets. This can work for very simple portfolios but becomes error-prone quickly as activity increases. Sometimes, data is no longer available, like when exchanges shut down or go under. Here's what to do when your exchange is dead and you need your history.
3. Combine Software with Manual Fixes
A common middle ground is to use tax software for the heavy lifting, then manually review and correct issues such as missing transactions, cost basis gaps, or misclassified activity. This approach can work, but it requires a good understanding of both the crypto data and the tax rules. We work closely with Koinly as our preferred crypto tax software platform.
4. Work with a Crypto Tax Specialist
For complex activity, DeFi, NFTs, high transaction volumes, multiple years, or missing data, a crypto tax professional who starts at the data layer is the safest option. CountDeFi's approach begins with forensic-level data collection and reconciliation across wallets, exchanges, and protocols. From there, we apply the correct IRS treatment to every transaction and produce complete, IRS-ready tax forms. Working with us is easy and starts with a free call.
Do Crypto Exchanges Send Tax Forms?
Yes. Starting with tax year 2025, custodial crypto brokers are required to issue Form 1099-DA reporting your proceeds directly to the IRS. You receive a copy; the IRS receives the same one.
What Is Form 1099-DA?
Form 1099-DA is the new IRS information return for digital asset transactions.
- Tax Year 2025 (forms issued early 2026): Brokers report gross proceeds. Cost basis reporting is optional.
- Tax Year 2026 (forms issued early 2027): Brokers must report both proceeds and cost basis for covered assets, those acquired and held continuously within the same broker account after January 1, 2026.
Critical limitation: brokers can only report cost basis for assets they have complete custody history over. Assets transferred in from another exchange, acquired through DeFi, or received as staking rewards will likely show blank cost basis on your 1099-DA. You remain responsible for calculating and documenting the rest. This gap is already posing huge problems for our clients.
I've done a full deep-dive on 1099-DA here.
What is Form 1099-MISC?
Form 1099-MISC reports crypto income such as staking rewards, airdrops, or other rewards. Exchanges usually issue this form if you earned more than $600 in a tax year. If you earned less, the income is still taxable, even if no form is issued.
Should You Rely on Exchange Tax Forms?
Exchange forms are a useful starting point, not something to file from on their own. They typically reflect activity on a single platform and miss transfers, wallet activity, and accurate cost basis. Accurate reporting requires reconciling data across all wallets and exchanges first.
IRS Matching and Audit Risk
Ever wondered if the IRS knows about your crypto? They've had multiple views on your activity for a while, but in 2025 the game changed completely, with 1099-DA. Now, the IRS will receive the same 1099-DA forms you receive. When broker-reported proceeds don't match what you report on your tax return, automated IRS systems flag the discrepancy. This can result in CP2000 notices demanding tax on "unreported" proceeds, even when you've properly accounted for cost basis yourself. Practical implication: Accurate IRS record-keeping is more important than ever.
If you're already in hot water, I have guides on the IRS audit escalation process:
- What IRS Crypto Letter 6174 means.
- How to respond to IRS Crypto Letter 6173.
- What to do if you receive an IRS CP2000 notice.
- How to survive an IRS crypto audit.
- What to do if you're asked to complete a Historical Digital Asset Form (HDAF).
Per-Wallet Cost Basis Tracking: What Changed in 2025
Under Revenue Procedure 2024-28, the IRS eliminated universal cost basis tracking effective January 1, 2025. Previously, you could track cost basis across all wallets as if held in a single pool. Starting in 2025, cost basis must be tracked separately for each wallet and exchange account.
How This Affects Your Cryptocurrency Tax Calculations
Old universal method example: You bought 1 BTC for $20,000 on Exchange A and 1 BTC for $60,000 on Exchange B. You sold 1 BTC on Exchange B for $70,000. Using FIFO universally, your cost basis could be $20,000 — a gain of $50,000.
New per-wallet method: Same purchases. You sold 1 BTC on Exchange B for $70,000. Your cost basis must come from Exchange B holdings: $60,000 — a gain of $10,000.
This change can significantly affect your tax liability depending on where your highest or lowest cost basis assets are held.
FIFO as Default Method
Starting in 2025, the default cost basis method is First-In-First-Out (FIFO) applied per wallet. You can still use specific identification (HIFO, LIFO, etc.), but you must document which lot you are selling before the transaction and maintain records to support your identification.
What Is the Lummis Crypto Tax Reform Bill?
The Lummis-Gillibrand Responsible Financial Innovation Act proposes several changes to how crypto is taxed in the US, including a de minimis exemption for small transactions under $200 and clearer asset classification rules. As of 2026, the bill has not been enacted into law. Current IRS rules apply in full. CountDeFi monitors legislative developments and updates clients as the tax landscape evolves.
How to Calculate Your Own Crypto Tax
If you want to calculate your US crypto taxes manually, the process is:
- Identify all taxable crypto transactions for the tax year
- Determine which are subject to capital gains tax and which are subject to income tax
- Establish the cost basis for each transaction using your chosen accounting method
- Calculate capital gains and losses, income amounts, and any deductible expenses
- Report all disposals, proceeds, gains or losses, and income on the correct IRS forms
For most investors with DeFi activity, multi-exchange portfolios, or missing historical data, this process requires more than a spreadsheet. That is where CountDeFi's data-first approach makes the difference.
Need Help With Your Crypto Taxes?
Crypto tax in the US is not optional, and in 2026 the IRS has more visibility into your activity than ever before. The difference between an accurate return and an audit-exposed one comes down to data: complete, reconciled, wallet-by-wallet transaction history.
That is what CountDeFi builds. We have defined crypto tax precision since 2017, with 1,000+ clients and a 4.9-star review score to show for it. Book a free 15-minute call today.
