How crypto is taxed in the US: IRS rules for 2026, including Form 1099-DA

The IRS defines digital assets as any digital representation of value recorded on a cryptographically secured, distributed ledger, such as a blockchain. That covers bitcoin, other cryptocurrencies, stablecoins and NFTs. The key rule is in the first line of the IRS guidance: for tax purposes, digital assets are property, not currency.

That one sentence explains most of what follows. Like selling stock, getting rid of crypto can produce a capital gain or loss. Like being paid in kind, receiving crypto for work or as a reward is income.

What’s taxable and what isn’t

Events that can create a capital gain or loss:

• Selling crypto for US dollars.
• Exchanging one digital asset for another. The IRS says that if you exchange digital assets for other digital assets that differ materially in kind or extent, you recognize a capital gain or loss (FAQ 64).
• Spending crypto on goods or services: you’ve disposed of property worth the value of what you bought.

Events that create ordinary income:

• Being paid in crypto for goods or services, including wages.
• Staking and mining rewards (see below).
• New coins from a hard fork, once you have control of them (FAQs 105–106), and airdrops. The IRS lists airdrops among the receipts that mean you must answer “Yes” to the digital asset question on your return.

Events that are not taxable:

• Buying crypto with dollars and holding it.
• Moving crypto between your own wallets or accounts. The IRS says this is a non-taxable event, except for any crypto you use, or that is withheld, to pay transaction fees (FAQ 81). Paying a network fee in crypto is itself a disposal of that crypto.
• Receiving a genuine gift. You don’t recognize income until you sell or otherwise dispose of the gifted crypto (FAQ 75).

Short-term vs long-term gains

The holding period decides the rate:

• One year or less: a short-term gain, taxed as ordinary income at your regular rates.
• More than one year: a long-term gain, taxed at 0%, 15% or 20% depending on your taxable income.

For 2026, the IRS has set these limits for long-term capital gains (taxable income, including the gain):

Filing status	0% rate up to	15% rate up to	20% rate above
Single	$49,450	$545,500	$545,500
Married filing jointly	$98,900	$613,700	$613,700
Head of household	$66,200	$579,600	$579,600
Married filing separately	$49,450	$306,850	$306,850

On top of that, the 3.8% Net Investment Income Tax can apply to investment income, including capital gains, if your modified adjusted gross income is above $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately).

Worked example: how the 0% and 15% brackets stack

Sam files as single for 2026. Their taxable income is $45,000 from salary, after deductions, plus a $10,000 long-term gain on bitcoin held for three years. Total taxable income: $55,000.

The gain sits on top of the salary income:

• $45,000 of salary uses up the space below $49,450, except for $4,450.
• The first $4,450 of the gain is taxed at 0%.
• The remaining $5,550 is taxed at 15%: $832.50.

If Sam had sold after only 11 months, the whole $10,000 would be a short-term gain taxed at ordinary income rates.

Cost basis: which coins did you sell?

Your basis is generally what you paid for the crypto, in dollars, plus the fees you paid to buy it (FAQ 56). Your gain or loss is the proceeds minus your basis.

When you hold units bought at different prices, which ones you sold matters:

• Specific identification. You can choose which units you’re selling if you identify them in your records before the transaction (for crypto in your own wallet), or tell your broker which units to sell (for crypto held at an exchange) (FAQs 82 and 85).
• First in, first out (FIFO). If you don’t identify specific units, the default is that the earliest units you acquired are sold first (FAQs 86 and 92).
• Wallet by wallet. Since January 1, 2025, identification works per wallet or per account: you can’t treat all your crypto across every wallet and exchange as one big pile. Revenue Procedure 2024-28 gave limited transition relief for people who used a “universal” method before 2025.

Staking, mining, airdrops and forks

The IRS ruled in Revenue Ruling 2023-14 that when you stake crypto and receive rewards, the fair market value of the rewards is income in the tax year you gain dominion and control over them, meaning when you’re able to sell, exchange or otherwise dispose of them. The ruling applies whether you stake directly or through an exchange.

The value you include as income becomes your basis in those tokens. If you later sell them for more or less than that value, you have a capital gain or loss on the difference.

Capital losses

Losses offset gains. If your capital losses are bigger than your capital gains for the year, you can deduct up to $3,000 of the excess against other income ($1,500 if married filing separately). Anything left over carries forward to future years.

Form 1099-DA: what your exchange now reports

Form 1099-DA is the new form brokers use to report digital asset proceeds from broker transactions to you and to the IRS.

• Sales on or after January 1, 2025: brokers report gross proceeds. The first forms covered the 2025 tax year.
• Cost basis: brokers must also report basis for “covered” digital assets, meaning those acquired on or after January 1, 2026 and held in a custodial account with that broker.
• Small-amount exceptions: under optional reporting methods, brokers don’t have to report sales of qualifying stablecoins if your total proceeds for the year are $10,000 or less, or sales of specified NFTs if they’re $600 or less.

Two practical consequences:

1. Basis may be missing. Crypto bought before 2026, or moved into an exchange from another wallet or platform, often won’t have basis on the form. The IRS says brokers can’t use basis information passed on by a transferring broker for reporting purposes. You still owe tax only on your actual gain, so you need your own records to report the correct basis.
2. The IRS sees the same numbers. A 1099-DA reporting proceeds with no matching sale on your return is an easy mismatch for the IRS to spot.

Where it goes on your return

• Form 8949 and Schedule D: sales, exchanges and other disposals of crypto held as an investment.
• Schedule 1 (Form 1040): ordinary income such as staking or mining rewards, if you’re not in business.
• Schedule C: if you mine, stake or trade as a business, or sell to customers in a business.
• Form 709: gifts of crypto above the annual exclusion, which is $19,000 per recipient for 2026.

Gifts to charity have their own rules. If you held the crypto for more than one year, your deduction is generally its fair market value at the time of the donation; for one year or less, it’s generally the lower of your basis and the fair market value (FAQ 78).

The question at the top of Form 1040

Every Form 1040 asks this question, and you must answer it:

At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?

According to the IRS, you answer “Yes” if, for example, you received crypto as payment, as mining or staking rewards or from an airdrop, or if you sold, exchanged or transferred it, including paying transaction fees in crypto. You can answer “No” if you only held crypto or only bought it with dollars.

Records to keep

For every transaction, keep the date and time, the type and number of units, the dollar value at the time, the fees, and the wallet or account involved. Exchange exports, wallet histories and your own spreadsheet are all useful. They are what let you prove your basis when the 1099-DA doesn’t show it.

Summary checklist

• Crypto is property: sales, swaps and purchases with crypto are taxable disposals.
• Held more than a year? For 2026, long-term rates are 0%, 15% or 20%, plus the 3.8% NIIT at higher incomes.
• Staking, mining, airdrops and crypto pay are ordinary income at fair market value.
• Track basis wallet by wallet; use specific identification or FIFO.
• Reconcile your records with every Form 1099-DA, and answer the digital asset question on Form 1040.