How Crypto Taxes Work
The IRS treats cryptocurrency as property, not currency. This means every sale, trade, or exchange of crypto is a taxable event subject to capital gains tax. When you sell crypto for more than you paid, you owe tax on the gain. The rate depends on how long you held the crypto: short-term gains (less than one year) are taxed at ordinary income rates, while long-term gains benefit from preferential rates of 0%, 15%, or 20%.
Common Taxable Crypto Events
Taxable events include: selling crypto for fiat currency, trading one cryptocurrency for another, using crypto to purchase goods or services, and receiving crypto as payment for work. Buying crypto with fiat currency, transferring between your own wallets, and gifting crypto (below the annual gift exclusion) are generally not taxable events.
Frequently Asked Questions
How do I determine my cost basis for crypto?â–¾
Your cost basis is typically the price you paid for the crypto plus any transaction fees (gas fees, exchange fees). If you received crypto through mining or staking, your cost basis is the fair market value at the time you received it. You can use FIFO (first in, first out), LIFO (last in, first out), or specific identification methods to determine which coins you sold.
Is swapping one crypto for another taxable?â–¾
Yes. Trading one cryptocurrency for another (e.g., Bitcoin for Ethereum) is a taxable event. You must recognize a gain or loss based on the fair market value of the crypto received versus your cost basis in the crypto given up. This applies to all crypto-to-crypto trades.
What about crypto earned from mining or staking?â–¾
Crypto earned from mining or staking is taxed as ordinary income at the fair market value on the date you receive it. This becomes your cost basis. When you later sell the mined or staked crypto, you'll owe capital gains tax on any appreciation above that cost basis.
Do I need to report crypto losses?â–¾
Yes, and you should. Crypto losses can offset crypto gains and up to $3,000 of ordinary income per year. Unused losses carry forward to future years. Since the wash sale rule does not currently apply to crypto, you can sell at a loss and immediately repurchase to harvest tax losses while maintaining your position.
Calclypso Editorial Team
Reviewed by certified financial professionals. Last updated: April 2026. Tax rates reflect 2025 IRS figures. Crypto tax rules are subject to change. This calculator provides estimates only and should not be used as tax advice.