Key takeaways
- Crypto is taxed as property in the US, so you owe tax when you sell, swap, or spend it, not when you buy and hold it.
- Selling after holding more than a year qualifies for long-term capital gains rates, which start at 0% and top out at 20% in 2026.
- Staking, mining, and airdrop rewards count as ordinary income at their value on the day you gain control of them.
- Brokers began sending Form 1099-DA for 2025 transactions in February 2026, and cost basis lands on those forms for 2026 transactions.
- Brokers began sending Form 1099-DA for 2025 transactions in February 2026, and cost basis lands on those forms for 2026 transactions.
- Moving coins between your own wallets is not a taxable event, though paying the network fee in crypto can be.
Crypto is taxed as property in the United States, which means every sale, swap, or purchase made with it can create a taxable gain or loss. Buying and holding creates nothing to report. The tax arrives at the moment you dispose of the asset, and how much you owe depends on one thing above all: how long you held it.
That framing has held since 2014, and the Internal Revenue Service (IRS) has not moved off it. What changed in 2026 is the paperwork. Brokers now report your crypto activity straight to the IRS, and this is the first filing season where that reporting is real rather than theoretical.
So the question is no longer whether the IRS knows. It is whether your records agree with what your exchange just filed.
How Is Crypto Taxed in the US?
Digital assets are treated as property, not currency, and general property tax rules apply. The IRS defines a digital asset as "any digital representation of value recorded on a cryptographically secured, distributed ledger," a definition covering Bitcoin (BTC), stablecoins, and non-fungible tokens (NFTs) alike, according to the agency's digital assets guidance page updated on 2 September 2026.
Property treatment splits your crypto tax into two buckets.
The first is capital gains, triggered when you dispose of an asset. Your gain is the sale price minus your cost basis, meaning what you originally paid including fees.
The second is ordinary income, covering crypto you received rather than bought: mining rewards, staking rewards, airdrops, and payment for work. That is taxed at your regular rate in the year you receive it.
One detail trips up almost every beginner. Swapping one coin for another is a disposal. Trading ETH for SOL is treated the same as selling ETH for dollars and buying SOL, even though no dollars moved.
Which Crypto Transactions Are Taxable?
Any transaction where you part with a digital asset is taxable, and any transaction where you simply hold or move your own coins is not. The IRS sets this out through the digital asset question that appears on the front of every Form 1040, which every taxpayer must answer whether they own crypto or not.
Sales and swaps are reported on Form 8949 and carried to Schedule D. Ordinary crypto income goes on Schedule 1, or Schedule C if you are running a business.
What Are the Crypto Tax Rates for 2026?
How crypto is taxed once you sell depends entirely on your holding period. Hold for one year or less, and the gain is short-term, taxed at your ordinary income rate. Hold for more than a year, and long-term rates apply, which are considerably kinder.
The IRS set the 2026 thresholds in Revenue Procedure 2025-32, released on 9 October 2025.
Those thresholds are taxable income, not crypto profit. The standard deduction for 2026 is $16,100 for single filers and $32,200 for married couples filing jointly, per the same revenue procedure.
Here is what that looks like in practice. Say you bought 1 BTC for $40,000 in 2024 and sold it this week. Bitcoin traded at $77,297.39 at 09:20 UTC on 12 September 2026, according to CoinGecko, giving you a gain of roughly $37,297. Because you held past the one-year mark, a single filer with taxable income under $545,500 owes 15% on that gain rather than their full income-tax rate.
Sell the same position eleven months in and the whole gain is taxed as ordinary income. That one month is often the most expensive month in a crypto portfolio.
How Are Staking, Mining, and Airdrop Rewards Taxed?
Staking rewards are ordinary income the moment you can actually use them. The IRS holds in Revenue Ruling 2023-14 that a cash-method taxpayer who stakes cryptocurrency includes "the fair market value of the validation rewards received" in gross income "in the taxable year in which the taxpayer gains dominion and control over the validation rewards."
Dominion and control is the operative test. If rewards are locked and you cannot sell, exchange, or move them, the clock has not started. Once you can, it has.
That value then becomes your cost basis. Receive 1 ETH worth $2,523.20, which is where Ethereum traded at 09:20 UTC on 12 September 2026 according to CoinGecko, and you report $2,523.20 of income now. Sell it later at $3,000 and you have a $476.80 capital gain on top.
Mining works the same way, with a wrinkle: mine as a business rather than a hobby and the income goes on Schedule C, where it faces self-employment tax but lets you deduct equipment and electricity.
What Is Form 1099-DA, and What Changes This Year?
Form 1099-DA is the new broker reporting form for digital assets, and 2026 is the first year taxpayers have actually held one. Brokers had to report gross proceeds for transactions effected on or after 1 January 2025, and send taxpayers their copy by 17 February 2026, according to the IRS.
The gap worth knowing about is basis. Most statements covering 2025 leave out your cost basis, so the form shows what you sold for and says nothing about what you paid. The IRS is blunt that the arithmetic is still yours: "Every taxpayer must report any related income, gains, or losses, whether they receive a Form 1099-DA or not."
Basis reporting starts with transactions effected on or after 1 January 2026, so the forms landing in early 2027 will carry both numbers.
One more rule catches people off guard. Under Revenue Procedure 2024-28, basis is tracked wallet by wallet rather than pooled across everything you own, and taxpayers had to allocate unused basis to specific wallets as of 1 January 2025. If you moved coins between wallets and never recorded which lot went where, that reconstruction is the job you have been putting off.
Notice 2024-57 also puts staking, lending, wrapping, and liquidity provision outside broker reporting until further guidance. Those transactions are still taxable to you. They are simply not on the form yet.
Does the Wash Sale Rule Apply to Crypto?
No, and that remains one of the few genuine advantages crypto holders have over stock investors. The wash sale rule in Section 1091 of the tax code applies to "stock or securities," and because the IRS classifies digital assets as property instead, selling crypto at a loss and rebuying it immediately does not currently disallow the loss.
Congress has noticed. H.R. 9172, the Applying Existing Tax Anti-Abuse Rules to Digital Assets Act, would extend wash sale and constructive sale rules to digital assets.
Until something passes, the rule stands as written. Anyone leaning on it should also keep in mind that the IRS can still challenge transactions lacking economic substance.
What Could Change: The Bills Sitting in Congress
No legislation has rewritten the rules above yet, though 2026 has been the busiest year for crypto tax bills so far. The House Ways and Means Committee held a full-committee legislative hearing on digital asset taxation on 9 June 2026, taking up six bills and two discussion drafts.
Chairman Jason Smith put a number on the everyday friction at that hearing. "31 percent of crypto owners would like to buy a cup of coffee at the local shop, yet each $5 cup of coffee bought with a digital asset generates two new pieces of tax paperwork," Smith said.
The proposals worth tracking:
- H.R. 9178, the Less Tax Paperwork for Digital Asset Owners Act, would exclude gains and losses on network fees and regulated dollar stablecoins from reporting.
- H.R. 9175, the Tax Clarity for Mining and Staking Act, would let taxpayers elect self-created property treatment, deferring the income point.
- S. 2207, Senator Cynthia Lummis's broader bill, proposes a $300 de minimis exemption per transaction with a $5,000 annual cap.
All of these sit at the introduced stage. H.R. 9178 was introduced on 8 June 2026 and referred to the Ways and Means Committee, per its Government Publishing Office record. None has become law, so none changes what you file for 2026.
What This Means for Your 2026 Filing
How crypto is taxed has not changed this year. What changed is the visibility. This is the first year the IRS receives an independent account of your exchange activity, and the first year a mismatch between your return and your broker's filing is easy to spot.
The practical takeaway is unglamorous: reconcile your records against every Form 1099-DA you received, fill in the basis your 2025 forms left blank, and get wallet-level records straight before the 2026 forms arrive with basis attached.
Keep records from day one. Your future self, sorting through four years of wallet transfers in April, will be grateful.
Frequently asked questions
Do I have to report crypto if I did not sell anything?
You still answer the digital asset question on Form 1040, but buying and holding crypto with dollars means you answer "no" and report nothing. The obligation begins when you sell, swap, spend, or receive digital assets. Moving coins between wallets you own also needs no reporting, as long as you did not pay the transfer fee in crypto.
How much crypto can I sell without paying tax?
There is no minimum exemption for crypto sales in 2026, so even a $20 gain is technically reportable. What can bring your bill to zero is the 0% long-term bracket, which covers single filers with taxable income up to $49,450 for the year. Senator Lummis's S. 2207 proposes a $300 per-transaction exemption, but that bill has not been enacted.
What happens if I do not report my crypto?
Unreported gains can trigger back taxes, interest, and accuracy-related penalties, and the IRS now receives Form 1099-DA data from brokers for transactions since January 2025. Underreporting is far easier to detect than it was two years ago. H.R. 9174 would create a one-time voluntary disclosure program with reduced penalties, though it has not passed.
Are crypto losses deductible?
Yes. Capital losses offset capital gains first, and up to $3,000 of net loss can be deducted against ordinary income each year, with the remainder carried forward. Because the wash sale rule does not currently reach digital assets, you can also sell at a loss and repurchase immediately without forfeiting the deduction.
Is converting crypto to a stablecoin taxable?
Yes, swapping a coin for a stablecoin such as USDC is a disposal, and any gain or loss on the coin you gave up is realized at that moment. Plenty of holders assume moving into a dollar-pegged token is neutral parking. It is not.
How is crypto taxed if I get paid in it?
Crypto received as payment for work is ordinary income at its fair market value on the day you receive it, reported on Schedule 1 or Schedule C depending on whether you are an employee or self-employed. That value also becomes your cost basis. If the coin rises before you sell, the increase is a separate capital gain.
Do I owe tax on crypto I moved to a hardware wallet?
No, moving your own coins to self-custody is not a disposal and creates no taxable event. What it does create is a record-keeping duty, because Revenue Procedure 2024-28 requires basis to be tracked wallet by wallet rather than pooled. Note which lots moved where, or reconstructing basis later gets painful.
