- For federal tax, the IRS treats digital assets as property, not currency. Selling, swapping or spending them can create a taxable gain or loss in US dollars.
- Held more than one year: long-term gain, taxed at 0%, 15% or 20%. Held one year or less: short-term gain, taxed as ordinary income at 10% to 37% (2026).
- Staking rewards, mining rewards and new coins from a hard fork are ordinary income when you gain control of them.
- US citizens are taxed on their worldwide income wherever they live. Giving up citizenship or a green card can trigger an exit tax on unrealized gains.
This page covers federal income tax for private individuals who hold crypto in the United States. Most states add their own income tax, which we do not cover. When and how to report is on filing and deadlines, and business income on business tax. It is general information, not tax advice.
How crypto is taxed
IRS Notice 2014-21 says that, for federal tax purposes, virtual currency is treated as property, and the general rules for property transactions apply. The IRS now uses the term digital assets, which it says include cryptocurrencies, stablecoins and non-fungible tokens (NFTs). Buying crypto with dollars and holding it is not taxable. A gain or loss arises when you sell, exchange or otherwise dispose of it: your gain is the fair market value of what you receive minus your basis (usually what you paid, including fees).
If you hold an asset for more than one year before you dispose of it, your gain or loss is long-term; one year or less, it is short-term. Net short-term gains are taxed as ordinary income. These are the 2026 rates from Revenue Procedure 2025-32:
| Ordinary income rate (2026) | Single: taxable income | Married filing jointly: taxable income |
|---|---|---|
| 10% | up to $12,400 | up to $24,800 |
| 12% | $12,401 to $50,400 | $24,801 to $100,800 |
| 22% | $50,401 to $105,700 | $100,801 to $211,400 |
| 24% | $105,701 to $201,775 | $211,401 to $403,550 |
| 32% | $201,776 to $256,225 | $403,551 to $512,450 |
| 35% | $256,226 to $640,600 | $512,451 to $768,700 |
| 37% | above $640,600 | above $768,700 |
Long-term gains are taxed at 0%, 15% or 20%, depending on your total taxable income:
| Long-term rate | Single (2025) | Single (2026) | Married filing jointly (2025) | Married filing jointly (2026) | Head of household (2026) |
|---|---|---|---|---|---|
| 0% | up to $48,350 | up to $49,450 | up to $96,700 | up to $98,900 | up to $66,200 |
| 15% | up to $533,400 | up to $545,500 | up to $600,050 | up to $613,700 | up to $579,600 |
| 20% | above that | above that | above that | above that | above that |
The 2025 amounts are from Revenue Procedure 2024-40. The standard deduction for 2026 is $16,100 for a single filer and $32,200 for married couples filing jointly. On top of income tax, the net investment income tax adds 3.8% on the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately). If your capital losses are larger than your gains, you can deduct the lesser of $3,000 ($1,500 if married filing separately) or your net loss against other income, and carry the rest forward to later years.
A worked example
Our own example, using the 2026 rates above: a single filer with $60,000 of taxable income from wages (after the standard deduction) sells bitcoin in 2026 for $35,000. She bought it for $20,000, including fees.
| Step | Bought in 2024 (held more than one year) | Bought in 2026 (held one year or less) |
|---|---|---|
| Gain | $35,000 − $20,000 = $15,000 long-term | $35,000 − $20,000 = $15,000 short-term |
| Taxable income including the gain | $75,000 | $75,000 |
| Rate on the gain | 15% (the wages already fill the 0% band up to $49,450) | 22% (the gain falls in the band from $50,401 to $105,700) |
| Federal tax on the gain | $15,000 × 15% = $2,250 | $15,000 × 22% = $3,300 |
If she also received staking rewards worth $1,000 when they arrived, that $1,000 is ordinary income (about $220 at 22%), and $1,000 becomes her basis in those coins. Her income is far below $200,000, so the net investment income tax does not apply. This is an illustration, not a tax calculation for your situation; state income tax comes on top.
What counts as a disposal
- Selling for dollars, swapping and spending. Exchanging one digital asset for another, or paying for goods or services with one, is a taxable disposal. This includes stablecoins: the IRS says you recognize gain or loss on stablecoins held as capital assets even if your broker does not report the sale.
- Moving your own crypto. The IRS says that a transfer from a wallet, address or account you own to another that also belongs to you is “a non-taxable event”, except to the extent of any digital assets you use, or that are withheld, to pay the transaction fee.
- Gifts you receive. If you receive digital assets as a bona fide gift, you do not recognize income until you sell, exchange or otherwise dispose of them. Your basis can depend on the donor’s basis and the value at the time of the gift.
- Donations. If you donate a digital asset you held for more than one year, your deduction is generally its fair market value at the time of the donation. If you held it one year or less, it is generally the lesser of your basis or its fair market value.
Basis, wallet by wallet
From 1 January 2025, basis is tracked wallet by wallet and account by account. You may identify the specific units you sell or transfer, no later than the date and time of the sale. For units held at a broker, you tell the broker which units, using the identifiers it provides, and keep records of that. If you do not identify units, the units acquired earliest in that wallet or account are treated as sold first (first in, first out). Notice 2025-7 gave transitional relief for units at a broker sold during 2025.
Paid in crypto
Under Notice 2014-21, if you receive virtual currency as payment for goods or services, you include its fair market value in US dollars on the date you receive it in your gross income. If you are an independent contractor, that is self-employment income. If an employer pays you in crypto, its value is wages, subject to withholding and employment taxes. The value you included becomes your basis in those coins.
Mining and trading
Under Notice 2014-21, the fair market value of mined coins is gross income on the date you receive them. If mining is a trade or business, your net earnings are also subject to self-employment tax (see business tax). For traders, the IRS rules are the same as for other property: each sale or swap is a separate disposal, short-term or long-term depending on how long you held the units. The IRS digital asset FAQs do not address the wash sale rule, which in the tax code refers to stock or securities, so we do not describe its application to crypto.
Staking, DeFi, airdrops and NFTs
- Staking. Revenue Ruling 2023-14 says that the fair market value of validation rewards is included in gross income in the tax year you gain “dominion and control” over them, whether you stake directly or through an exchange. The ruling addresses a cash-method taxpayer.
- Hard forks and airdrops. Revenue Ruling 2019-24 covers a hard fork followed by an airdrop of new coins. The IRS says that if you receive new digital assets after a hard fork, you have taxable income in the year you receive them, if you have dominion and control over them. Your basis is the amount you included in income. A hard fork without new coins reaching you is not income.
- NFTs. NFTs are digital assets, so selling one is a disposal. In Notice 2023-27 the IRS said that, pending further guidance, it treats an NFT as a collectible if the right or asset it represents is a collectible (a “look-through analysis”). Long-term gains on collectibles are taxed at a maximum rate of 28%.
- DeFi. The IRS has published no specific guidance on lending, liquidity pools or wrapping tokens. Swapping one token for another is a disposal under the general rules above.
Moving to or from the United States
The US taxes its citizens and resident aliens on their worldwide income. The IRS says that, if you live abroad, “you are subject to tax on worldwide income from all sources”. Moving abroad therefore does not end US tax on your crypto gains while you are a citizen or green card holder. If you live abroad on the due date, you get an automatic two-month extension to file, to 15 June. Someone who moves to the US and becomes a resident generally becomes taxable on worldwide income too; the residency tests are not covered here.
Giving up US citizenship, or ending long-term residency (a green card in at least 8 of the last 15 tax years), can trigger the expatriation tax under section 877A of the tax code. If you are a covered expatriate, “all property of a covered expatriate is deemed sold for its fair market value on the day before the expatriation date”, so unrealized gains on crypto become taxable. You are a covered expatriate if any of these apply:
| Test | 2025 | 2026 |
|---|---|---|
| Average annual net income tax for the five years before expatriation more than | $206,000 | $211,000 |
| Net worth on the date of expatriation | $2 million or more | $2 million or more |
| You do not certify five years of tax compliance on Form 8854 | covered | covered |
| Exclusion from the deemed-sale gain | $890,000 | $910,000 |
Form 8854 must be filed when you expatriate; the IRS lists a $10,000 penalty for not filing it. Get professional advice before you give up citizenship or a green card.
Gifts and inheritance
Federal gift and estate tax apply to crypto like other property: in 2026 the annual gift exclusion is $19,000 per recipient and the estate tax basic exclusion is $15,000,000. How heirs receive crypto, including the step-up in basis, is covered in this guide to crypto inheritance in the United States.
Upcoming changes
At the time of writing (October 2026) we found no enacted change to how the IRS taxes digital assets held by individuals for 2026. What changes for reporting is that brokers report basis for assets acquired from 2026 (see Form 1099-DA). The 2027 rates and thresholds are not yet published.
Sources
- IRS: Digital assets (last checked October 2026)
- IRS: Frequently asked questions on digital asset transactions (last checked October 2026)
- IRS: Notice 2014-21 (Internal Revenue Bulletin 2014-16) (last checked October 2026)
- IRS: Revenue Ruling 2019-24 (Internal Revenue Bulletin 2019-44) (last checked October 2026)
- IRS: Revenue Ruling 2023-14 (Internal Revenue Bulletin 2023-33) (last checked October 2026)
- IRS: Notice 2023-27, treatment of certain nonfungible tokens as collectibles (last checked October 2026)
- IRS: Topic no. 409, Capital gains and losses (last checked October 2026)
- IRS: Topic no. 559, Net investment income tax (last checked October 2026)
- IRS: Revenue Procedure 2025-32 (2026 inflation adjustments) (last checked October 2026)
- IRS: Revenue Procedure 2024-40 (2025 inflation adjustments) (last checked October 2026)
- IRS: U.S. citizens and resident aliens abroad (last checked October 2026)
- IRS: Expatriation tax (last checked October 2026)
- 26 U.S.C. § 877, expatriation to avoid tax (definition of long-term resident) (last checked October 2026)
This page is general information, not tax advice. Rules and rates change, so check the official sources above before you act.