How is crypto taxed in the United States?

The United States taxes cryptocurrency as property, not as money. Selling, swapping or spending crypto can produce a capital gain or loss, and crypto earned through work, mining or staking counts as ordinary income. The Internal Revenue Service (IRS), the federal tax agency, set out this approach in 2014 and has built on it since.

Why does the IRS treat crypto as property?

In Notice 2014-21, issued in March 2014, the IRS said the general tax principles that apply to property also apply to virtual currency. The agency now uses the broader term "digital assets", which covers cryptocurrencies, stablecoins and NFTs.

In practice, crypto is taxed much like shares. Each unit has a cost basis, meaning what the owner paid for it, and tax is worked out when the unit is disposed of.

What counts as a taxable event?

The IRS lists three main ways of disposing of crypto that produce a capital gain or loss:

• selling it for dollars
• exchanging it for a different cryptocurrency
• using it to pay for goods or services

The gain or loss is the value received minus the cost basis. Buying crypto with dollars and holding it is not taxable, and neither is moving it between wallets you own. A separate guide covers what happens if you do not sell.

Critics say this makes crypto awkward to use as money, because even a small purchase is technically a sale of property that must be tracked.

What is taxed as income?

Crypto is ordinary income when it arrives as wages or payment for services, as a mining reward, as a staking reward, or as new coins from an airdrop that follows a hard fork. The amount of income is the fair market value in dollars when the crypto is received. A 2023 IRS ruling said staking rewards are income in the year the holder gains control over them.

What is the difference between short-term and long-term gains?

The holding period decides the rate. A gain on crypto held for one year or less is short-term and is taxed at ordinary income rates. A gain on crypto held for more than one year is long-term and, for the 2025 tax year, is taxed at 0%, 15% or 20% depending on taxable income. Losses can offset gains, and disposals are reported on Form 8949 and Schedule D.

The law may change. On September 16, 2026, the House Ways and Means Committee approved the Digital Asset Tax Certainty Act, which would rewrite several of these rules. As of October 2026 it had not passed the House or the Senate.

Tax rules differ by country and by state, and they change. For your own situation, check the IRS or a qualified tax professional.