Yes — but only when something actually happens. The confusing part is which actions count and which don't. This guide explains what's taxed, how much you'll pay at 2026 rates, how to report it, and the legal ways to pay less.
The split
Taxed vs not taxed
| Taxed | Not taxed |
|---|---|
| Sell for cash | Buy and hold |
| Swap one coin for another | Move coins between wallets you own |
| Spend crypto at a shop | Receive a gift (within limits) |
| Earn it (staking, DePIN, mining, pay) | Donate to a registered charity |
Those four count. Buying and holding does not. Moving coins between wallets you own does not.
When you owe
When you do owe tax
- Selling crypto for cash — you're taxed on the profit (or you can claim a loss).
- Trading one crypto for another — swapping BTC for ETH counts as selling the BTC.
- Spending crypto — paying for goods or services with crypto is treated like selling it.
- Earning crypto — staking, mining, airdrops, DePIN rewards, or being paid in crypto are taxed as income.
When you don't
When you don't
- Buying and holding — no tax until you do something with it.
- Moving crypto between your own wallets — a transfer isn't a sale.
- Receiving a gift (within limits) — though selling it later may be taxable.
- Donating to a registered charity — generally not taxable, and may be deductible.
The math
How the gain is calculated
Your taxable gain is the sale price minus your cost basis — what you originally paid, including fees. If you bought 1 ETH for $2,000 and later sold it for $3,200, your gain is $1,200, and that's what's taxed (not the full $3,200). Sell for less than you paid and you have a loss, which can reduce your bill.
A worked example
You buy $1,000 of Bitcoin. Months later it's worth $1,600 and you swap it for Ethereum. Even though you never cashed out to dollars, that swap is a taxable event — you have a $600 short-term gain, taxed at your income rate. Later you sell the ETH for $2,000; that's another taxable event on the gain since the swap. Two actions, two taxable moments — which is exactly why tracking matters.
2026 rates
How much? The 2026 rates
Two things set your rate: how long you held and how you got it.
Rate table checked August 2026. Brackets move a little every year — confirm on IRS.gov before you file.
| Situation | How it's taxed | Rate |
|---|---|---|
| Held ≤ 1 year, then sold | Short-term gain = ordinary income | 10%–37% |
| Held > 1 year, then sold | Long-term capital gain | 0%, 15% or 20% |
| Crypto you earned | Ordinary income (then gains apply later) | 10%–37% |
The long-term brackets depend on your total taxable income — for the 2025 tax year the 0% long-term rate applies up to roughly $48,000 of taxable income for single filers, 15% in the broad middle, and 20% at the top. Thresholds adjust each year. The headline takeaway: holding for over a year before selling can sharply cut what you owe.
Earned coins
Tax on crypto you earn (staking, airdrops, mining)
Crypto you receive — staking and DePIN rewards, mining, airdrops, or wages paid in crypto — is taxed as ordinary income at its dollar value on the day you received it. That value also becomes your cost basis, so if you later sell it for more, you pay capital gains on the additional increase. In other words, earned crypto can be taxed twice: once as income when it lands, and again as a gain if it appreciates before you sell. (More detail: are DePIN & staking rewards taxable?)
Pay less, legally
How to legally pay less crypto tax
- Hold for over a year. Long-term rates (0–20%) are well below short-term (up to 37%).
- Harvest your losses. Selling losing positions to offset gains — and up to $3,000 of ordinary income — legally lowers your bill.
- Mind your bracket. Realising gains in a lower-income year can mean the 0% or 15% long-term rate.
- Keep complete records. Missing cost-basis data makes software treat your whole sale as profit — accurate records prevent overpaying.
Reporting
How to report crypto on your taxes
In the US, your return asks a "digital asset" question right at the top — answer it honestly. Capital gains and losses from selling or swapping go on Form 8949 and are summarised on Schedule D. Crypto earned as income (staking, rewards, wages) goes on Schedule 1 or Schedule C if it's self-employment. Tax software generates all of these for you from your transaction history. The filing walk, including Form 1099-DA, is here: how to file crypto taxes in the US (2026).
What they already know
What changed: the 1099-DA
From the 2025 tax year, US exchanges report your crypto sales to the IRS on a new form, the 1099-DA — the form the exchange sends the IRS — and from 2026 they'll report your cost basis too. In plain terms: assume the IRS can see your exchange activity. Report it, and make sure what you file matches what they receive; mismatches are what trigger automated notices.
If the year is messy
The easy way to handle it
If you have more than a handful of transactions, doing this by hand is painful and error-prone. Crypto tax software connects to your wallets and exchanges, calculates every gain and loss, and produces the exact forms you file. We compared the main options in best crypto tax software in 2026.
Sources: IRS — Digital Assets · NerdWallet — crypto tax rates 2026 · CoinLedger — crypto tax rates 2026