How crypto is taxed in 2026 comes down to three rules. The IRS treats digital assets as property, so selling, swapping or spending them creates a capital gain or loss, and assets received as a reward or as payment are ordinary income [1]. Gains on assets held one year or less are short term and taxed at ordinary rates, while assets held longer qualify for long-term rates of 0%, 15% or 20%, with the 0% band reaching $48,350 of taxable income for single filers and $96,700 for joint filers in the 2025 tax year [2]. And brokers now file Form 1099-DA: gross proceeds for sales on or after January 1, 2025, and cost basis for assets acquired on or after January 1, 2026 [1][3]. With bitcoin (BTC) closing at $61,485 on July 2, 2026, about 51% below its October 2025 high of roughly $126,200, many investors also hold losses that can offset gains this year [6].
How crypto is taxed in 2026: property, not currency
Every individual return asks a yes or no question: at any time during the tax year, did the taxpayer receive a digital asset as a reward, award or payment for property or services, or sell, exchange or otherwise dispose of a digital asset or a financial interest in one [1]. Answering it correctly is the starting point. The IRS lists the events that follow from the property rule [1]:
- Selling a digital asset for dollars is a disposal and produces a capital gain or loss.
- Exchanging one digital asset for another, for example ether (ETH) for bitcoin, is also a disposal, even though no dollars change hands.
- Paying for goods or services with a digital asset is a disposal at the fair market value of what was received.
- Receiving a digital asset as a reward, award or payment for property or services is ordinary income, measured in U.S. dollars at the time of receipt [1].
The holding period sets the rate. If the asset was held as a capital asset for one year or less, the gain is short term and taxed like wages [1]. If it was held for more than one year, the long-term schedule applies [2].
Capital gains rates that apply to crypto
The long-term rates are the same ones that apply to stocks. For the 2025 tax year, which is the return most investors filed in 2026, the 0% rate applies up to $48,350 of taxable income for single filers, $96,700 for married couples filing jointly and $64,750 for heads of household; the 15% rate applies above those amounts up to $533,400, $600,050 and $566,700 respectively; and the 20% rate applies above that [2]. Short-term gains use the ordinary brackets, where the top rate of 37% starts at $640,600 of income for single filers and $768,700 for joint filers in 2026 [5]. The 2026 standard deduction is $16,100 for single filers and $32,200 for joint filers, which shelters part of any gain for taxpayers with little other income [5].
| Filing status (2025 tax year) | 0% rate up to | 15% rate up to | 20% rate above |
|---|---|---|---|
| Single | $48,350 | $533,400 | $533,400 |
| Married filing jointly | $96,700 | $600,050 | $600,050 |
| Head of household | $64,750 | $566,700 | $566,700 |
Source: IRS Topic 409 [2].
The $3,000 loss rule
Losses first offset gains of the same kind, then gains of the other kind. If losses still exceed gains, the taxpayer can deduct up to $3,000 against ordinary income ($1,500 if married filing separately) and carry the rest forward to later years [2]. After a drawdown of the size seen between October 2025 and June 2026, that carryforward can be worth more than the current-year deduction, because it shelters future gains at whatever rate would otherwise apply.
Form 1099-DA: what brokers report and when
Form 1099-DA, titled Digital Asset Proceeds From Broker Transactions, is the crypto equivalent of the 1099-B that stock brokers send [3]. The rollout is in two steps. Brokers report gross proceeds for transactions effected on or after January 1, 2025, and the IRS said it would not impose penalties for 2025 forms if the broker made a good faith effort to file and furnish them [1]. Basis reporting begins for transactions effected on or after January 1, 2026 [1]. In practice, that means a coin bought at a U.S. broker in 2026 and sold there later will show both proceeds and cost on the form, while a coin bought in 2024 will show proceeds only, and the investor must supply the basis.
Two de minimis rules reduce the paperwork for small transactions. A broker using the optional reporting method for qualifying stablecoins is not required to report those sales if the customer's aggregate gross proceeds from them do not exceed $10,000 for the year, and a broker using the optional method for specified NFTs is not required to report if aggregate proceeds do not exceed $600 for the year [4]. The IRS also excluded Form 1099-DA from the Combined Federal/State Filing Program for tax year 2025, so state copies are handled separately [3].
Record keeping that survives an audit
The IRS expects taxpayers to keep records that show the purchase, receipt, sale, exchange or any other disposition of their digital assets, together with the fair market value in U.S. dollars at each event [1]. Broker forms will not do this job alone in 2026. Three gaps are common:
- Assets moved from one wallet or platform to another look like a sale to the receiving broker unless the transfer is documented, so a transfer log with dates and amounts matters.
- Self-custody wallets have no broker, so every swap or payment made from them must be tracked by the owner.
- Coins acquired before 2026 carry no broker-reported basis, so the original purchase records set the taxable gain.
Investors who track prices through DataPorium's crypto price history can pair each transaction date with a daily close to document fair market value; the same data showed bitcoin closing at $58,559 on June 30, 2026, the lowest daily close of the year, and at $61,485 two days later [6].
Why simpler rules would help investors and the Treasury
The property rule is defensible: it taxes gains once and lets losses offset them, which is how most capital markets work. The cost is complexity. A single coffee paid in bitcoin is a reportable disposal, and a coin-to-coin swap creates a taxable event without any cash to pay the tax. The de minimis thresholds for stablecoins and NFTs show that reporting rules can be simplified without giving up revenue [4]. A broader de minimis rule for small payments, and clear guidance that transfers between an investor's own wallets are not sales, would reduce compliance costs and likely improve accuracy. The fair counterpoint is that broker reporting closes a real gap: proceeds and basis reported by a third party are matched by computer, which raises voluntary compliance and lowers audit costs for everyone else.
Crypto is taxed as property in 2026, brokers now report cost basis for new purchases, and the investor's own records still decide the gain on everything bought before this year.
Key takeaways
- Digital assets are property; selling, swapping or spending them creates a capital gain or loss, and rewards or payments are ordinary income [1].
- Long-term gains are taxed at 0%, 15% or 20%; for the 2025 tax year the 0% band ends at $48,350 for single filers and $96,700 for joint filers [2].
- Form 1099-DA reports gross proceeds for 2025 sales and adds cost basis for assets acquired on or after January 1, 2026 [1][3].
- Small stablecoin sales (up to $10,000 a year) and small NFT sales (up to $600) can be left off broker reports under optional methods [4].
- Excess losses are deductible up to $3,000 a year against ordinary income, with the remainder carried forward [2].
Frequently asked questions
Is swapping one cryptocurrency for another a taxable event?
Yes. The IRS treats an exchange of one digital asset for another as a disposal of the asset given up, so the difference between its cost basis and its fair market value at the time of the swap is a capital gain or loss [1].
When does Form 1099-DA start showing cost basis?
Brokers report gross proceeds for sales on or after January 1, 2025, and add cost basis for digital assets acquired on or after January 1, 2026, so the first forms with basis cover the 2026 tax year [1].
How much crypto loss can be deducted in a year?
Losses offset capital gains first; any excess is deductible against ordinary income up to $3,000 a year, or $1,500 if married filing separately, and the rest carries forward to future years [2].
What records does the IRS expect crypto investors to keep?
Records that document the purchase, receipt, sale, exchange or other disposition of each digital asset, plus its fair market value in U.S. dollars at each event [1].
Sources & References
- [1] IRS: Digital assets
- [2] IRS Topic no. 409, Capital gains and losses
- [3] IRS: About Form 1099-DA, Digital Asset Proceeds From Broker Transactions
- [4] IRS: Corrections to the 2025 Instructions for Form 1099-DA, de minimis rules
- [5] IRS IR-2025-103: Tax inflation adjustments for tax year 2026
- [6] DataPorium crypto prices (BTC-USD daily history)
