Cryptocurrency Tax Guide: What You Owe in 2026
Cryptocurrency taxation has become increasingly complex and enforced. The IRS now requires exchanges to report transactions, and penalties for non-compliance are severe. This guide explains exactly what you owe and how to minimize your tax burden legally.
Your Situation
You have bought, sold, or traded cryptocurrency in the past year and need to understand your tax obligations. You want to know what is taxable, at what rates, and how to report correctly.
What Triggers a Taxable Event?
Not every crypto transaction is taxable. Taxable events: selling crypto for fiat currency, trading one crypto for another (BTC → ETH), using crypto to buy goods/services, receiving mining income, receiving staking rewards, and getting paid in crypto. Non-taxable: buying crypto with fiat, transferring between your own wallets, gifting under $18,000/year.
Each taxable event requires calculating the gain or loss: Sale Price - Cost Basis = Gain/Loss. Cost basis is what you originally paid including fees. Use our crypto tax calculator to compute your liability.
Tax Rates for Crypto
Short-term gains (held less than 1 year) are taxed as ordinary income at your marginal rate (10-37%). Long-term gains (held over 1 year) receive preferential rates: 0% for income under $47,025, 15% for $47,026-$518,900, and 20% above that.
| Income Level (Single) | Short-Term Rate | Long-Term Rate |
|---|---|---|
| $0 - $11,925 | 10% | 0% |
| $11,926 - $47,025 | 12% | 0% |
| $47,026 - $103,350 | 22% | 15% |
| $103,351 - $197,300 | 24% | 15% |
| $197,301 - $250,525 | 32% | 15% |
| $250,526 - $518,900 | 35% | 15% |
| $518,901+ | 37% | 20% |
Tax-Loss Harvesting
Unlike stocks, cryptocurrency is currently not subject to the wash-sale rule. This means you can sell a crypto position at a loss to realize the tax deduction, then immediately repurchase the same crypto. This harvests the tax loss while maintaining your position.
For example: you bought ETH at $4,000 and it is now $3,000. You could sell (realizing a $1,000 loss), then immediately rebuy at $3,000. The $1,000 loss offsets gains elsewhere, saving you $150-$370 in taxes at long-term/short-term rates. Note: tax laws may change — consult a tax professional.
Action Steps
Track all transactions
Use a portfolio tracker to log every buy, sell, trade, and staking reward with dates and amounts.
Crypto P/L Calculator →Calculate gains and losses
Apply FIFO, LIFO, or specific identification to determine cost basis for each sale.
Crypto Tax Calculator →Harvest losses before year-end
Sell positions at a loss to offset gains. Rebuy immediately if you want to maintain exposure.
Report on Form 8949 & Schedule D
All crypto dispositions must be reported on Form 8949 and summarized on Schedule D of your tax return.