How Crypto Capital Gains Tax Works in the US
The IRS classifies cryptocurrency as property, so each sale, trade, or use triggers a capital gains event. Short-term gains (held ≤ 1 year) are taxed at ordinary income rates; long-term gains (held > 1 year) receive preferential treatment at 0%, 15%, or 20%.
Short-Term vs Long-Term Tax Rates
| Holding Period | Tax Rate | Notes |
|---|---|---|
| ≤ 1 year | 10–37% (ordinary) | Same as wages |
| > 1 year (low income) | 0% | ≤ ~$48,350 single |
| > 1 year (most) | 15% | Most taxpayers |
| > 1 year (high income) | 20% | High earners |
Crypto Tax Tips
Since the wash sale rule doesn't apply to crypto, you can sell losing positions to realize losses and immediately repurchase. This "crypto tax loss harvesting" can reduce your tax bill significantly without changing your long-term portfolio.
FAQ
Yes — trading Bitcoin for Ethereum, for example, is a taxable event. You're selling the BTC (triggering a gain or loss based on your cost basis) and buying ETH. This applies even if no fiat currency is involved.
Yes — staking rewards and mining income are generally treated as ordinary income when received, at the fair market value at time of receipt. When you later sell the staked coins, any gain/loss uses that receipt value as your cost basis.
※ Federal tax only. State taxes, NIIT, and other factors may apply. Consult a tax professional.