How is crypto taxed?

Crypto is taxed in the US as property, not as currency. That single fact explains almost everything else: because it is property, you are taxed when you dispose of it (a capital gain or loss) and when you receive it as income (ordinary income), but not merely for owning it while it goes up or down. The decision map above walks the same logic. Everything here is general information for the 2025 tax year, US-focused unless noted, and last checked 10 September 2026 — it is not tax advice, and rules differ by country and change from year to year.

Crypto is treated as property

The IRS has said since 2014 (Notice 2014-21) that virtual currency is property for federal tax purposes, and it has never changed that stance. Treating crypto like a share of stock or a piece of real estate, rather than like dollars, is the root of every rule that follows. A share is not taxed while you hold it; it is taxed when you sell it for a gain, and any income it throws off is taxable when received. Crypto works the same way. The practical catch is that people use crypto like money — swapping it, spending it — and each of those uses is, for tax, a disposal of property.

Capital gains: the tax when you dispose

When you dispose of crypto you have a capital gain or loss, equal to what you got for it minus what it cost you (your cost basis). Disposal means more than cashing out: selling for dollars, swapping one coin for another, and spending crypto on goods or services are all disposals. How long you held it decides the rate. Hold for one year or less and it is a short-term gain, taxed at your ordinary income rate (10% to 37% in 2025). Hold for more than a year and it is a long-term gain, taxed at the lower long-term rates of 0%, 15% or 20% depending on your taxable income — the exact income thresholds change each year, so check the current figures for your filing status. That gap between short- and long-term is the single biggest lever most people have, and we unpack it in crypto capital gains explained.

Income: when you receive crypto

Receiving new crypto as income is taxed differently from disposing of it: it is ordinary income, valued at the fair-market price on the day you receive it. This covers being paid in crypto, mining, most airdrops, interest or rewards from lending, and staking rewards. On staking, the IRS was explicit in Revenue Ruling 2023-14: rewards are income for the year in which you gain "dominion and control" — roughly, when you can actually move or sell them. That day's value becomes both your income figure and your cost basis, so if you later sell the reward, you only pay capital gains on the change since you received it. The mechanics of DeFi, staking and airdrop tax get their own guide, because that is where records most often go missing.

What is not taxed

Several everyday actions are generally not taxable events in the US. Buying crypto with dollars and holding it is not taxed — an unrealised gain, however large, is not income until you dispose of the asset. Moving crypto between wallets you own is not a disposal, because you have not changed who owns it. Giving crypto as a gift is generally not taxable to you up to the annual gift-tax exclusion, and donating it to a qualified charity can even be deductible. And holding through a fall costs you nothing in tax — losses only count once you realise them. The one that trips people up is buy-and-hold: we spell it out in do you pay tax on crypto you haven't sold.

Cost basis and the 2025 per-wallet change

Your cost basis is what you paid for a coin plus any fees, and it decides the size of your gain when you sell. When you have bought the same coin many times at different prices, you need a rule for which units you are selling — by default the US uses FIFO (first in, first out), and specific identification is allowed if you keep adequate records. The important 2025 change is how those lots are pooled. Under Revenue Procedure 2024-28, from 1 January 2025 the IRS requires cost basis to be tracked per wallet and per account, rather than as one universal pool across all your holdings. Anyone who previously used a universal method was expected to make a one-time allocation snapshot as of the end of 2024. This is exactly the kind of dated, technical change where good software — or a professional — earns its keep, and where you should confirm the current guidance rather than rely on an old habit.

The forms you'll actually use

For a US individual, capital gains and losses from crypto go on Form 8949, which totals up onto Schedule D. Crypto income — staking, mining, airdrops, pay — goes on Schedule 1, or Schedule C if it is a business. Every Form 1040 also has a plain digital-asset question near the top that you must answer honestly. New from the 2025 tax year: US custodial exchanges now report your sales to you and the IRS on Form 1099-DA, starting with gross proceeds; cost-basis reporting is phased in for transactions from 2026. That means the IRS increasingly receives a copy of your activity, which is covered in the 1099-DA and broker-reporting guide. Software can produce these forms for you; when it is time to choose a tool, see our ranking of the best crypto tax software.

Outside the US: the rules differ

Almost everything above is US-specific. Most countries with a capital-gains system tax crypto disposals in a broadly similar way — a gain when you sell or swap, income when you are paid in it — but the details vary enormously: the UK has its own capital-gains allowance and share-pooling rules through HMRC, several countries treat long-held crypto more favourably, and a few have no capital-gains tax on it at all. Rates, allowances, forms and even whether crypto-to-crypto swaps are taxed all depend on where you live and can change year to year. If you file outside the US, treat this page as background only and check your own tax authority's current rules — and pick a tool that produces reports for your country, which our best crypto tax software guide flags for European and UK filers.