Crypto tax in the United States

The Internal Revenue Service (IRS) treats crypto as property rather than as currency, a position it has held since 2014 and which remains current as of February 2026. That single classification drives most of the rest. Because crypto is property, disposing of it triggers a capital gain or loss measured against your cost basis, and receiving it as payment or reward is income measured at fair market value when received.

Every Form 1040, the main federal income tax return, carries a digital asset question asking whether during the year you received, sold, exchanged, or otherwise disposed of a digital asset. You answer this question whether or not you owe any tax on crypto.

A disposal includes selling crypto for dollars, swapping one token for another, and spending crypto on goods or services. Each disposal is generally a capital gains event as of February 2026. The gain or loss is the difference between what you receive and your cost basis, which is usually what you paid plus acquisition costs. Where you held the asset for one year or less, any gain is short term and taxed at ordinary income rates. Where you held it for more than one year, the gain is long term and taxed at the lower long term capital gains rates.

Disposals are reported on Form 8949 and carried to Schedule D of the federal return. Buying crypto with dollars and simply holding it is generally not a taxable event, and moving crypto between your own wallets is generally not a disposal. Capital losses can offset capital gains and, within limits, other income, subject to the usual rules. Confirm the detail with a tax professional before filing.

Crypto received as a reward or as payment is generally ordinary income at its fair market value in dollars when you receive it or gain control of it. The IRS position as of February 2026 is that staking rewards are taxable as income when the taxpayer gains dominion and control over them, and the same value then becomes the cost basis for a later disposal. Mining income and most airdrops are also generally ordinary income, and mining carried on as a business can attract self employment tax. Crypto received as wages is treated as compensation.

A new digital asset broker reporting regime is phasing in. Custodial platforms report gross proceeds from digital asset sales on a dedicated reporting form for transactions from 1 January 2025, with the first of those forms issued in 2026. Cost basis reporting begins for transactions from 1 January 2026. These forms help the IRS match what taxpayers report, but the duty to report all transactions sits with the taxpayer regardless of whether a form is issued.

Keep records of acquisition dates, cost basis, disposal dates and proceeds, and the dollar value of any crypto income when received. State income tax may apply on top of federal tax, with rules and rates that vary by state. This is general information, not tax advice, so verify your position with a qualified tax professional before filing.