Crypto taxes in the US: the basics, in plain English
Swapping one coin for another feels like nothing happened. To the IRS, something did. Here are the US basics, so you know which moves to write down, and when to ask a professional.
Read this first: this page explains general US rules as we understand them in October 2026. It isn't tax advice. Tax rules change and your situation is your own. Talk to a tax professional before you file.
The one idea behind it all
The IRS treats crypto (it says "digital assets") as property, not as money.
That one idea explains most of the rules. Selling a coin works a lot like selling a share of stock, or a painting. If you sell for more than you paid, that's a gain. If you sell for less, that's a loss.
What can be a taxable event
These moves can create a gain or loss you need to report:
- Selling crypto for dollars.
- Trading one crypto for another, including swapping for a Stablecoin. Each swap counts as selling the first coin.
- Spending crypto on goods or services.
These can count as income, valued at the market price when you receive them:
- Staking rewards (the IRS said so in 2023). See crypto staking explained.
- Mining rewards.
- Airdropped tokens. See crypto airdrops explained.
- Being paid in crypto for work.
What usually isn't
- Buying crypto with dollars and holding it.
- Moving coins between your own wallets or accounts. (Fees paid in crypto can be a small separate matter. Ask a professional.)
Gifts and donations have their own rules. That's a professional question.
How the gain is worked out
The basic sum is simple:
Gain or loss = what you sold it for − what it cost you.
What it cost you is called your cost basis. It usually includes the fees you paid to buy.
A math example, not tax advice: you buy 0.1 BTC for $6,000, including fees. Later you swap it for ether worth $6,500. You've "sold" the bitcoin for $6,500. Gain = $6,500 − $6,000 = $500, even though you never touched dollars. The ether now has a cost basis of $6,500.
That's why crypto-to-crypto trading can surprise people. Many small swaps can mean many small gains and losses to report.
Short term vs long term
How long you held the coin matters:
| Held for | Called | Taxed |
|---|---|---|
| 1 year or less | Short-term | At your regular income tax rate |
| More than 1 year | Long-term | At lower long-term capital gains rates, for most people |
Losses can offset gains. If losses are bigger than gains, US rules generally let you use up to $3,000 a year against other income, and carry the rest forward. A professional can apply this to your numbers.
The forms you'll hear about
- The digital asset question on Form 1040. The main tax form asks whether you received, sold or traded digital assets during the year. You answer yes or no.
- Form 8949 and Schedule D. Where gains and losses from sales are usually listed and totalled.
- Form 1099-DA. A newer form that crypto brokers send to you and the IRS.
About Form 1099-DA (dated facts)
- For 2025 sales: brokers report your gross proceeds (what you sold for). They didn't have to report what you paid.
- For sales from January 1, 2026: brokers must also report cost basis for "covered" assets, mainly coins bought and held in the same account at that broker.
Here's the catch. Coins you moved in from another wallet or exchange may show proceeds with no cost. You are still responsible for working out your own basis. Good records fix that.
The records to keep
Write these down for every trade, or keep exports that include them:
- Date and time of the buy, sell or swap.
- Which coin and how much.
- The dollar value at that moment.
- Fees paid.
- Which platform or wallet.
- Transfers between your own wallets, so they aren't mistaken for sales.
A trading journal helps here too. Our guide on how to keep a trading journal covers the trading side, and the free journal template is a simple start. Many people also use crypto tax software that imports exchange history. It's only as good as the data you feed it.
Habit that saves hours: download your full transaction history from every exchange at least once a quarter. Exchanges close, merge and change formats. Your records shouldn't depend on them.
Common mistakes
- "I didn't cash out, so I owe nothing." Swapping coin for coin can still be taxable.
- Forgetting small income. Staking rewards and airdrops count, even small ones.
- Losing the cost basis when moving coins between platforms.
- Mixing up transfers and sales. Moving coins to your own wallet isn't a sale, but software can mislabel it.
- Waiting until April. Rebuilding a year of swaps is much harder than logging as you go.
When to talk to a professional
Pretty much always before you file, and especially if you:
- Made many trades or used DeFi apps.
- Earned staking, mining or airdrop income.
- Traded futures or perpetuals.
- Received or gave crypto as a gift.
- Live in a state with its own rules.
Look for a tax professional who works with digital assets. For official guidance, search for the IRS's "digital assets" page on irs.gov.
Questions
Is crypto taxed in the US?
Yes. The IRS treats crypto as property. Selling it, swapping it for another crypto or spending it can create a taxable gain or loss, and rewards like staking and airdrops are generally taxed as income.
Is swapping one crypto for another taxable?
Generally, yes. The IRS treats a crypto-to-crypto swap as selling the first coin at its market value, so it can create a gain or loss even if you never receive dollars.
Do I pay tax if I just buy and hold crypto?
Buying crypto with dollars and holding it isn't usually a taxable event. Tax generally comes when you sell, swap or spend it, or when you receive crypto as income.
What is Form 1099-DA?
A form crypto brokers send to customers and the IRS. For 2025 sales it reports gross proceeds; for covered sales from 2026 it also reports cost basis. You're still responsible for your own basis records.
How long do I have to hold crypto for long-term capital gains?
More than one year. Gains on coins held one year or less are short-term and taxed at regular income rates; longer holdings generally get lower long-term rates. A tax professional can confirm the details for you.
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