How Crypto Is Taxed in the U.S. (2026) | Learn

As digital assets continue to find their place in the U.S. financial system, taxes have become part of the conversation every crypto investor eventually has to face. By 2026, the rules around crypto are far clearer than they once were, even though a few areas still require interpretation.

Over time, the Internal Revenue Service has tightened the framework. Reporting requirements have expanded, definitions around common crypto activity have sharpened, and enforcement now leans more heavily on information shared by brokers and platforms.

Whether you are new to cryptocurrency and simply buying and selling, or more experienced and using features such as staking, mining, and other on-chain activity, understanding how crypto is taxed in the United States matters.

This 2026 update outlines where things stand today, what has changed over time, and how investors can move forward with greater confidence.

Is Cryptocurrency Taxed in the U.S.?

Yes. In the United States, cryptocurrency is taxed. The IRS treats digital assets as property rather than currency, which means crypto can be taxed in different ways depending on how it is used.

What Is Considered a Taxable Event?

In the United States, cryptocurrency becomes taxable when it is sold, exchanged, spent, or earned in a way that results in income or a realized gain or loss. The IRS evaluates each situation based on how the crypto is used and what occurs at the time of the transaction.

Common taxable crypto activities include:

Selling cryptocurrency for U.S. dollars: When crypto is sold for cash, any increase in value from the original purchase price may be subject to capital gains taxes.
Exchanging one cryptocurrency for another: Swapping one digital asset for another is treated as a taxable event. The original asset is considered disposed of, and any gain or loss must be calculated at that time.
Using cryptocurrency to purchase goods or services: Paying with crypto is taxable if the asset has appreciated in value since it was acquired.
Receiving cryptocurrency as income: Crypto earned through work, services, mining, airdrops, or staking rewards is generally taxed as ordinary income based on its fair market value when received.

Each transaction is evaluated based on the fair market value of the cryptocurrency at the time it occurs. Buying cryptocurrency with U.S. dollars and holding it on its own does not create a tax obligation.

By 2026, these rules remain consistent. What has changed is the clarity around how taxable events are defined and how closely they are monitored.

Capital Gains Tax on Crypto

Capital gains taxes apply when cryptocurrency is sold, exchanged, or used at a higher value than its original cost. The gain or loss is calculated by comparing what you paid for the asset, including fees, to its fair market value at the time of the transaction.

In practical terms, many common crypto activities fall under capital gains rules. Selling crypto for U.S. dollars, exchanging one digital asset for another, or using crypto to purchase goods or services can all result in a taxable gain or loss.

If the value of the crypto has increased since it was acquired, the difference is considered a capital gain. If the value has declined, the result is a capital loss, which may be used to offset other capital gains for tax purposes.

The amount of tax owed depends not only on the size of the gain, but also on how long the asset was held before it was disposed of.

Short-Term vs. Long-Term Capital Gains

The IRS distinguishes between short-term and long-term capital gains based on the holding period:

Short-term capital gains: Crypto held for one year or less is considered short-term. Any gains are taxed at ordinary income tax rates, which generally range from 10 percent to 37 percent depending on income.
Long-term capital gains: Crypto held for more than one year qualifies for long-term capital gains treatment. These gains are taxed at lower rates, generally ranging from 0 percent to 20 percent depending on income.

For investors with a long-term mindset, holding periods can have a meaningful impact on after-tax outcomes. In many cases, timing alone can influence how much of a gain is ultimately kept.

Using Cryptocurrency to Purchase Goods and Services

Using cryptocurrency to pay for goods or services is considered a taxable event in the United States. From a tax perspective, the IRS treats this type of transaction as a disposal of the digital asset.

When crypto is used for a purchase, its fair market value in U.S. dollars at the time of the transaction is compared to its original cost. If the value of the crypto has increased since it was acquired, the difference is generally subject to capital gains taxes.

If the value has declined, the transaction may result in a capital loss. Because everyday purchases can create taxable events, keeping records of purchase dates, cost basis, and transaction values remains important for accurate reporting.

Crypto Income Tax Explained

Not all crypto activity is taxed as a capital gain. When cryptocurrency is earned rather than sold or exchanged, it is generally taxed as ordinary income. The value of the crypto is measured in U.S. dollars at the time it is received.

If the asset is later sold or exchanged, a separate capital gains calculation may apply based on any change in value from that point forward.

Staking Rewards

Staking rewards are taxable as income when they are credited to your account. The amount included in income is based on the fair market value of the cryptocurrency at the time it is received.

Mining Income

Crypto earned through mining is generally treated as ordinary income based on the fair market value of the coins when received. For individuals or entities mining as a business, certain expenses related to mining operations may be deductible under IRS guidelines.

Airdrops and Promotions

Airdrops and promotional crypto distributions are typically taxable when the recipient gains control over the assets. The value of the crypto at the time it becomes accessible is treated as ordinary income.

What Is Not Considered a Taxable Event?

Not every interaction with cryptocurrency creates a tax obligation. In several common situations, crypto activity does not trigger taxes because no gain, loss, or income has been realized.

Examples of non-taxable crypto activity include:

Buying cryptocurrency with U.S. dollars
Holding cryptocurrency without selling or exchanging
Transferring crypto between wallets you own
Buying and selling crypto within a tax-advantaged retirement account

While these activities are not taxable, keeping accurate records remains important for establishing cost basis and ownership.

How the IRS Tracks Crypto in 2026

One of the most important developments in crypto taxation is expanded third-party reporting.

Form 1099-DA

Beginning with transactions that occurred in 2025 and reported in 2026, many digital asset platforms are required to issue Form 1099-DA. This form reports gross proceeds from digital asset transactions to both the taxpayer and the IRS.

While cost basis reporting is still phasing in, the IRS now receives far greater visibility into crypto activity than in prior years.

Increased Enforcement

With enhanced reporting, the IRS has improved its ability to match reported transactions with individual tax returns. Accurate reporting is more important than ever.

Cost Basis and Recordkeeping

Cost basis represents what you paid for a digital asset, including fees. Accurate cost basis tracking is critical for calculating gains and losses.

In 2026, many investors still rely on their own records to supplement broker reporting, particularly for assets acquired before mandatory cost basis reporting fully applies.

Maintaining detailed transaction history remains a best practice, especially for investors using multiple platforms.

Crypto Losses and Tax Benefits

Capital losses from crypto can be used to offset capital gains from other investments. If total capital losses exceed gains, up to $3,000 can be deducted against ordinary income each year, with remaining losses carried forward.

Common Crypto Tax Mistakes to Avoid

As enforcement tightens, common mistakes can become costly:

Assuming crypto-to-crypto exchanges are not taxable
Failing to report staking or reward income
Relying solely on platform summaries without verification
Ignoring small transactions

Accuracy and consistency matter, regardless of transaction size.

How a Crypto IRA Can Help With Crypto Taxes

For investors who want exposure to digital assets without dealing with the ongoing complexity of crypto taxes, a tax-advantaged Crypto IRA is a popular solution.

A Crypto IRA allows you to buy and sell cryptocurrencies inside a retirement account. Instead of tracking taxes on every transaction, activity inside the account follows standard IRA tax rules. This can greatly reduce the time and effort required to manage capital gains and income reporting.

There are two primary types of Crypto IRAs:

Traditional Crypto IRA: Contributions are generally made with pre-tax dollars, and taxes are deferred until withdrawals are taken in retirement. This option may appeal to investors who expect to be in a lower tax bracket later in life.
Roth Crypto IRA: Contributions are made with after-tax dollars, and qualified withdrawals in retirement are tax-free. For investors with a long-term outlook on digital assets, this structure can offer meaningful tax advantages over time.

Because buying and selling crypto within an IRA does not trigger capital gains taxes at the time of each transaction, investors can adjust their holdings without immediate tax consequences. This creates a simpler and more predictable way to include crypto in a long-term strategy.

Platforms such as iTrustCapital provide access to cryptocurrencies within both Traditional and Roth IRA structures, offering a compliant way to align crypto exposure with retirement planning while reducing tax-related complexity.

Open an account at iTrustCapital

If you’re looking to get started with crypto this year, iTrustCapital is a platform many investors have been turning to for both everyday and long-term investing. The platform offers a Premium Custody Account for standard crypto investing, as well as a tax-advantaged Crypto IRA* designed for retirement-focused strategies.

Click here to learn more and open an account today!

*Some taxes may apply.

Disclaimer

This article is for informational purposes only and is not intended to constitute investment advice in any way or constitute an offer to buy or sell any cryptocurrency, digital asset or security or to participate in any investment strategy.

iTrustCapital is a fintech software platform for alternative assets. iTrustCapital is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular digital asset, precious metal or investment strategy.

Investing in any digital asset or cryptocurrency (including meme coins) carries significant risks due to their speculative and highly volatile nature. Staking involves considerable risk. Past performance is not an indication of future results. No investment is completely risk-free, and every investment carries the potential for losing some or all of the principal amount invested. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Digital asset (Cryptocurrency) deposits held with institutional storage providers are never FDIC insured and may lose value. Clients do not receive a choice of custody partner.

Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Conduct your own research and consult with a qualified legal, investment, or tax professional to assess your own risk tolerance prior to investing.

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