Crypto taxes in the US: what actually counts as a taxable event
In the US, crypto is treated as property rather than currency. That single fact drives everything: you owe tax when you dispose of it, not when you buy it or hold it. Selling for dollars is a disposal. So is trading one coin for another, and so is spending crypto on something. Moving coins between wallets you own is not.
What changed recently is visibility. US exchanges now report your sales directly to the IRS on a dedicated form, so the agency sees the same numbers you do — but in most cases it does not yet see what you originally paid. That gap is where people overpay.
This page explains how the rules work in general terms. It is not tax advice, and we are not tax professionals. Crypto tax gets complicated quickly — staking, DeFi, NFTs, mining and anything involving multiple wallets are all areas where a qualified preparer is worth the fee.
What triggers tax, and what does not
| Action | Taxable? |
|---|---|
| Buying crypto with dollars | No — this sets your cost basis |
| Holding it, however long | No |
| Moving between your own wallets | No — but keep the basis records |
| Selling for dollars | Yes — capital gain or loss |
| Trading one coin for another | Yes — this is the one people miss |
| Spending crypto on goods or services | Yes — treated as a disposal |
| Receiving staking or mining rewards | Yes — generally ordinary income at receipt |
| Gifting crypto | Generally not to the giver, though gift tax rules may apply |
The crypto-to-crypto row is worth repeating. Swapping Bitcoin for Ethereum is a disposal of the Bitcoin, and you owe tax on any gain even though no dollars entered your bank account. Plenty of people discover this after a year of active swapping.
Short-term versus long-term
How long you held before disposing changes the rate materially.
One year or less is a short-term gain, taxed at ordinary income rates — the same brackets as your salary.
More than one year is a long-term gain, taxed at preferential federal rates.
The gap between the two is significant, which is why the holding period is worth tracking deliberately rather than discovering after the fact. Note that state treatment can differ from federal — some states tax long-term gains as ordinary income.
Form 1099-DA, and what it leaves out
Form 1099-DA, titled Digital Asset Proceeds From Broker Transactions, is how US centralized exchanges now report your sales. The broker files a copy with the IRS and sends one to you.
Two limitations matter more than the form itself.
It may not show what you paid
For 2025 transactions, brokers were required to report gross proceeds only — cost basis was not required, so that section is frequently blank or marked unknown. Cost basis reporting begins with 2026 transactions, and even then only for what the IRS calls covered assets: those acquired on or after 1 January 2026 and held continuously in the same broker's account until sale.
Anything bought earlier, or transferred in from another wallet or exchange, is non-covered — the broker is not required to report its basis. Practically, the first forms carrying basis data arrive in early 2027, and even those will have gaps.
Why this costs money. If the IRS sees $8,000 of proceeds and no cost basis, the starting assumption is unhelpful to you. If you paid $7,000, your actual gain is $1,000 — but only if you can show it. Without records you risk being taxed on far more than you made.
It does not cover everything
The form applies to centralized custodial exchanges. A DeFi-specific version of the rule was repealed by Congress in April 2025, so decentralized platforms are not covered today.
Things that generally will not appear on a 1099-DA: DeFi swaps, most NFT activity, staking rewards, wallet-to-wallet transfers, and sales on non-US exchanges.
None of that makes them untaxed. You are required to report all taxable crypto activity whether or not a form arrives. The absence of paperwork is not the absence of an obligation.
The per-wallet rule, and why it changed things
The IRS eliminated the universal method, which had allowed people to treat the same asset held across several wallets as one combined pool. You are now expected to track cost basis on a per-wallet or per-account basis.
In practice this means: if you hold Bitcoin on two exchanges and in a hardware wallet, each is tracked separately. When you sell from one, the basis comes from that location, not from an average across all three.
For anyone who has moved coins around over several years, reconstructing this is the hardest part of crypto tax. It is also the strongest argument for keeping records as you go rather than at filing time.
Cost basis: the number to protect
Your cost basis is what you paid, plus fees and other acquisition costs.
Example. You buy 1 ETH for $3,000 and pay a $50 transaction fee. Your basis is $3,050. Sell later for $3,500 and your taxable gain is $450 — not $3,500. Forgetting the fee alone costs you tax on an extra $50.
What to keep, per transaction: date, amount, price in dollars at the time, fees, which wallet or exchange, and what the transaction was. Export history from every exchange while you still have the account — platforms shut down, and reconstructing a closed exchange's history is close to impossible.
Practical setup
- Export transaction history from every platform annually, even ones you no longer use.
- Record basis when you transfer. The receiving wallet has no idea what you paid; only you do. This is directly relevant if you move funds to a hardware wallet — see what a cold wallet is.
- Track per wallet, not as one pool.
- Note the acquisition date for every lot, since it decides short versus long term.
- Consider crypto tax software if you have more than a handful of transactions. It connects to exchanges and wallets and assembles the picture, which is tedious to do by hand. CoinLedger is a reasonable starting point for US filers because it exports directly into TurboTax — readers can use the code CRYPTOTAX10 for 10% off. If your activity is heavy on DeFi, staking or spread across many chains, Koinly handles that with less manual tagging. We compare both in best crypto tax software.
- Use a professional for staking, DeFi, NFTs, mining, or anything spanning several years and platforms.
Losses are worth recording too
Capital losses offset capital gains, and unused losses can generally be carried forward. People often only track the transactions that made money, which means paying tax they could have offset.
If you sold at a loss, that is still a reportable transaction and it can work in your favour.
Common questions
Do you pay tax on crypto if you do not sell for dollars?
Yes. Trading one coin for another is a disposal and is taxable, even though no cash is involved.
Is moving crypto between my own wallets taxable?
No, but you must carry the cost basis records with it — the receiving wallet will not know what you paid.
What is Form 1099-DA?
The IRS form US centralized exchanges use to report your digital asset sales. A copy goes to you and to the IRS.
Does Form 1099-DA show what I originally paid?
Not for 2025 transactions — gross proceeds only. Basis reporting starts with 2026 transactions and only for assets acquired on or after 1 January 2026 and held with the same broker.
What if I never received a form?
You still report the activity. Reporting obligations do not depend on receiving paperwork.