How crypto tax works in United States
The IRS treats convertible virtual currency as property, so selling coins for dollars, swapping one token for another, or spending crypto on goods and services is a disposal measured against cost basis.
Assets held more than one year qualify for preferential long-term capital gains rates of 0%, 15%, or 20% at federal level, while holdings of one year or less are taxed at ordinary income rates plus any state tax.
Mining rewards, staking income, airdrops, and wages paid in crypto are ordinary income at fair market value when received, and that value becomes the cost basis for any later disposal gain or loss.
Tax rates at a glance
- Long-term capital gains
- 0% / 15% / 20%
- Short-term gains
- 10% - 37%
- Net investment income surtax
- 3.8%
- Mining and staking rewards
- Ordinary rates
- Crypto wages
- Ordinary + payroll
- Like-kind exchange
- Not available
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
Long-term holdersEmployees paid in cryptoMiners and stakersActive tradersExpats
Watch out for
- Crypto-to-crypto trades are taxable in the US even with no dollar proceeds, so high-frequency DeFi swappers can owe tax on gains they never cashed out.
- The wash-sale rule for securities does not currently extend to crypto property, but loss-harvesting schemes still face economic-substance scrutiny and possible future legislation.
- Brokers now report gross proceeds on Form 1099-DA, with basis reporting phasing in, which narrows the gap between exchange records and filed returns.
- US citizens are taxed on worldwide crypto income wherever they live, and state tax adds a second layer that follows residence and sourcing rules.
Frequently asked questions
How is crypto taxed in the United States?
As property. Disposals produce capital gain or loss based on holding period, while mining, staking, airdrops, and crypto wages are ordinary income at fair market value on receipt.
What is the long-term capital gains rate on crypto?
For crypto held more than one year, the federal rates are generally 0%, 15%, or 20% depending on taxable income, plus a possible 3.8% net investment income tax and state tax.
Is swapping one crypto for another taxable?
Yes. The IRS treats a crypto-to-crypto exchange as a sale of the coin given up, measured against its basis, followed by acquisition of the new coin at fair market value.