Crypto Taxes Explained: What You Owe When You Sell, Trade, or Earn Crypto
The IRS treats crypto as property, not currency. Every trade, sale, and swap is a taxable event.
In the US, cryptocurrency is taxed as property. Selling Bitcoin for dollars, trading Ethereum for Solana, using crypto to buy a coffee — ALL are taxable events that must be reported. The tax rate depends on how long you held the asset.
Short-Term vs Long-Term
Held less than 1 year: taxed at ordinary income rates (10-37%). Held more than 1 year: taxed at long-term capital gains rates (0%, 15%, or 20% depending on income). The difference is significant — a $10,000 gain taxed at 22% (short-term) costs $2,200, while the same gain at 15% (long-term) costs $1,500.
What Is NOT Taxable
Buying crypto with dollars (no gain yet). Transferring between your own wallets. Holding (no taxable event until you sell or trade). Gifting up to $18,000 per recipient per year (2026 gift tax exclusion). What IS taxable: selling, trading crypto-to-crypto, spending crypto, earning crypto (mining, staking, airdrops — taxed as income at fair market value when received).