What counts as a taxable event

You have a capital gain or loss when you dispose of a coin. The IRS digital assets page lists these disposals:

• Sell for dollars. You sell 0.1 BTC on an exchange for cash.
• Swap coin to coin. You trade ETH for SOL. The swap is a disposal of the ETH.
• Spend. You pay for goods or services with crypto, in any amount.
• Pay a fee in crypto. A transfer fee paid with a coin is a disposal of that coin.

Some actions are not disposals. The IRS lists these cases for a "No" answer to the digital asset question on Form 1040:

• You only held crypto.
• You bought crypto with dollars and did not sell it.
• You moved crypto between wallets or accounts that you own.

A transfer fee paid in crypto during such a move is a digital asset transaction. Crypto that you receive as payment, as a reward or from mining or staking is income. The last section covers staking rewards.

Short-term or long-term: the holding period

The holding period sets the rate. A coin held more than one year gives a long-term gain or loss. A coin held one year or less gives a short-term gain or loss.

The IRS counts from the day after you acquire the asset, up to and including the day you dispose of it. For example, you buy on March 1, 2025. A sale on March 1, 2026 is short-term. A sale on March 2, 2026 is long-term.

Each purchase has its own holding period. Coins that you buy on different days have different holding periods, even in the same wallet. The units that you sell decide both the cost basis and the holding period of the sale.

Long-term rates and thresholds for 2025 and 2026

The IRS sets the long-term rate by taxable income. The tables show the top of the 0% band and the top of the 15% band. The 20% rate applies to taxable income above the 15% band.

Tax year 2025 (filed in 2026)

Tax year 2026 (filed in 2027)

Short-term rates: the ordinary brackets

The IRS taxes net short-term gains as ordinary income at graduated rates. The IRS adds the gain to your wages and other income. Each rate applies only to the part of taxable income inside its band.

Each amount is the taxable income above which the rate starts. "Joint" means married filing jointly.

Worked example: one ETH sale

Assume that you are a single filer in tax year 2026. You bought 1 ETH for $2,000 and sold it for $3,500 after 14 months. Your other taxable income is $78,500. Your MAGI is below $200,000, so the net investment income tax (NIIT) does not apply.

• Gain: $3,500 - $2,000 = $1,500.
• Holding period: 14 months is more than one year, so the gain is long-term.
• Rate: taxable income is $78,500 without the gain and $80,000 with it. Both amounts sit inside the 15% band for a single filer in 2026, so the rate is 15%.
• Tax: $1,500 × 15% = $225.

Now change one fact. You sold after 10 months, so the $1,500 gain is short-term. The 22% bracket for a single filer in 2026 starts above $50,400, and your income stays inside it. Tax: $1,500 × 22% = $330.

In this example, the longer holding period lowers the tax by $105.

NIIT, losses and the $3,000 limit

NIIT. The net investment income tax is 3.8%. The tax applies to the lesser of two amounts: your net investment income, or the part of your modified adjusted gross income (MAGI) above a threshold. IRS Topic 559 counts net gains from the disposition of property as investment income for this tax.

The MAGI threshold is $200,000 for single and head of household filers, $250,000 for married filing jointly and $125,000 for married filing separately. The IRS does not index the thresholds for inflation, so the amounts are the same for 2025 and 2026.

Losses. A crypto loss first offsets your capital gains. If losses are larger than gains, up to $3,000 of the net loss reduces other income ($1,500 if married filing separately). The rest carries forward to later years. The tax-loss harvesting guide shows how the timing of a sale works.

Staking income, per-wallet basis and Form 1099-DA

Staking. Under Rev. Rul. 2023-14, staking rewards are gross income. You include their fair market value in the tax year when you gain dominion and control over them. The value is set at that date and time. A later sale of the rewards is a separate disposal with its own gain or loss.

Basis per wallet. From Jan 1, 2025, specific identification or FIFO (first in, first out) applies inside each wallet or account, not across all of them. Rev. Proc. 2024-28 gave a safe harbor to allocate unused basis to each wallet as of Jan 1, 2025. The Form 8949 guide gives the deadlines for that allocation.

Form 1099-DA. Brokers report gross proceeds on Form 1099-DA for sales from Jan 1, 2025. For 2025 sales, they do not have to report basis.