⚡ Key Takeaways
- Every crypto sale, trade, and exchange is a taxable event
- Short-term gains (held under 1 year) taxed as ordinary income — up to 37%
- Long-term gains (held over 1 year) taxed at 0%, 15%, or 20%
- Staking rewards are taxed as ordinary income when received
The IRS treats cryptocurrency as property. Every time you sell, trade, or use it — even swapping one coin for another — you've triggered a taxable event. In 2026, crypto reporting is stricter than ever with new 1099-DA forms. Here's what you must know.
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What Is a Taxable Event?
| Action | Taxable? | Tax Type |
|---|---|---|
| Buying crypto with dollars | No | None (records your cost basis) |
| Selling crypto for dollars | Yes | Capital gains |
| Trading BTC for ETH | Yes | Capital gains on BTC disposed |
| Buying goods with crypto | Yes | Capital gains |
| Earning staking rewards | Yes | Ordinary income at fair market value |
| Receiving airdrops | Yes | Ordinary income when received |
| Transferring between own wallets | No | None |
Capital Gains Rate for Crypto (2026)
Short-term (held less than 1 year): Same as ordinary income rate — 10% to 37%
Long-term (held more than 1 year): 0% if income under $48,350 (single), 15% up to $533,400, 20% above.
Tax-Loss Harvesting
Unlike stocks, crypto has no wash-sale rule yet. You can sell a losing position, immediately rebuy it, and still claim the tax loss. This is one of the most powerful legal tax strategies available to crypto investors in down markets.
Best Crypto Tax Software 2026
- Koinly — Best overall, imports from 300+ exchanges
- CoinTracker — Great for DeFi and NFTs
- TaxBit — Enterprise-grade, used by Coinbase
"The days of 'the IRS won't know' are over. 1099-DA forms go mainstream in 2026. Every transaction is tracked. Report everything." — Sarah Mitchell