Confused about crypto taxes? Discover how crypto is taxed and how to report it. Our 2025 guide breaks down IRS rules, making it easy to file your crypto gains and income confidently.
Yes, cryptocurrency gains and income are taxable in the US. According to the IRS, crypto transactions can be subject to Income Tax or Capital Gains Tax, depending on the nature of the transaction.
In simple terms, if you sell cryptocurrency or use it to make a purchase and its value has increased since you acquired it, you'll owe taxes on the profit. This is because the change in value results in a gain or loss. Additionally, if you receive cryptocurrency as payment for goods or services, it is treated as business income and taxed accordingly.
The tax rate on cryptocurrency in the US varies based on your income, the type of transaction, and how long you’ve held the asset.
- Short-term capital gains and crypto income can be taxed up to 37%.
- Long-term capital gains are taxed between 0% and 20%.
- NFTs classified as collectibles may face a 28% tax rate.
Use a crypto tax calculator to estimate your tax liability.
Since Bitcoin and other cryptocurrencies are considered property for tax purposes, individuals may be subject to either Income Tax or Capital Gains Tax. The specific tax you owe will depend on the nature of the transactions involving your cryptocurrency. We will examine both types of taxes.
Since cryptocurrency is classified as a capital asset for tax purposes, any time you dispose of crypto, you may be liable for Capital Gains Tax. In the US, there are several ways to dispose of cryptocurrency:
- Selling crypto for fiat currency.
- Exchanging crypto for other cryptocurrencies (including stablecoins, tokens, and more).
- Using crypto to purchase goods or services.
You will incur Capital Gains Tax on any profit (capital gain) realized from the disposal of the cryptocurrency.
There is no separate Capital Gains Tax rate for cryptocurrency; it follows the general Capital Gains Tax guidelines. The rate you'll pay on your crypto depends on how long you've held the asset and your income level. If you've held the cryptocurrency for less than a year, you’ll be subject to the short-term Capital Gains Tax rate. If you've held it for more than a year, you’ll be taxed at the long-term Capital Gains Tax rate.
When you sell, trade, or spend crypto, it triggers a capital gain or loss. A profit leads to a capital gain, while a loss means a capital loss. To calculate your gain or loss:
Determine your cost basis, which includes the purchase price and any associated fees. If the crypto was a gift, use its fair market value in USD on the day you received it.
Example
You bought 1 BTC for $33,660 (including a 2% fee). You sold it for $60,000. The sale minus the cost ($60,000 - $33,660) equals a $26,340 capital gain. If held for less than a year, this gain is taxed at the short-term rate, the same as your income tax rate. If held for more than a year, this gain is taxed at the long-term rate.
