Crypto Taxes 2026

What Changed: Form 1099-DA

Starting with the 2025 tax year (returns filed in 2026), crypto brokers and exchanges must report your digital-asset sales to the IRS on the new Form 1099-DA. Cost-basis reporting phases in starting with the 2026 tax year. In practice this means the IRS now has an independent record of your trades — and it matches those forms against your return. Unreported sales are the fastest way to a CP2000 notice.

This does not change what you owe, only how visible it is. The tax rules for crypto have been in place for years: crypto is treated as property, and selling or swapping it realizes a capital gain or loss.

What Counts as a Taxable Event

• Selling crypto for cash — the classic taxable event.
• Trading one crypto for another — swapping BTC for ETH is treated as selling BTC and buying ETH; the gain on the BTC side is taxable.
• Buying goods or services with crypto — spending crypto realizes a gain or loss.
• Earning staking rewards, mining, or interest — taxed as ordinary income at receipt.
• Receiving an airdrop or hard fork — generally taxable income at fair market value.

Simply holding crypto is not taxable. Moving it between your own wallets is not taxable. The tax triggers on selling, swapping, spending, or earning.

Short-Term vs Long-Term Rates

Holding period decides everything. More than one year = long-term, taxed at the capital-gains rates of 0%, 15%, or 20%. One year or less = short-term, taxed as ordinary income at your normal bracket (10% to 37%).

Example: a $10,000 Bitcoin gain held two years is taxed at 15% for most earners — $1,500. The same $10,000 gain held six months and taxed at a 24% ordinary bracket costs $2,400. The holding period alone saves $900.

The 3.8% NIIT on Top

High earners pay an extra 3.8% Net Investment Income Tax on investment income — including crypto gains — above $200,000 (single) or $250,000 (joint) of MAGI. So a top-bracket long-term gain can effectively be taxed at 23.8% (20% + 3.8%), and a short-term gain can reach 40.8% (37% + 3.8%).

Loss Harvesting and Cost Basis

Crypto's volatility cuts both ways. The IRS wash-sale rule that blocks loss-harvesting on stocks does not apply to crypto, so you can sell a coin at a loss, claim the loss, and rebuy it — a unique tax-planning lever. Net capital losses offset gains, and up to $3,000 of excess loss offsets ordinary income each year.

Track your cost basis (what you paid, including fees) carefully. With cost-basis reporting now phasing in on Form 1099-DA, accurate records are both your defense in an audit and the key to not overpaying.

Frequently Asked Questions