Crypto Taxes in the US: Property Treatment, Capital Gains Rates, and Form 1099-DA

The rule everything else is built on

The IRS treats cryptocurrency as property, not currency, for tax purposes. That single classification, made official in IRS guidance back in 2014 and never reversed since, is the reason almost everything else in this guide works the way it does. Property doesn’t get the tax treatment of cash: when you dispose of property at a gain, that gain is taxable, the same as it would be for a stock or a rental house. Cash sitting in your wallet doesn’t trigger tax just by existing; crypto doesn’t either, but the moment you dispose of it, the property rules kick in.

“Dispose of” is broader than most people expect. Selling Bitcoin for dollars is the obvious case, but trading one crypto asset for another (BTC for ETH, say) is also a disposal under property rules, even though no dollars ever touched a bank account. The IRS treats that swap as if you sold the BTC for its dollar value at the moment of the trade, then used those dollars to buy ETH. Spending crypto directly on a purchase works the same way: buying a laptop with Bitcoin is treated as selling the Bitcoin, then spending the proceeds. None of this requires cashing out to a bank account; the taxable event happens the moment you give up the asset, in exchange for anything of value. For the broader version of this principle across other countries, see Crypto Taxes: What Usually Counts as a Taxable Event; the US is simply one of the more literal, consistently enforced examples of it.

Short-term vs. long-term: the one-year line that changes your rate

How long you held the asset before disposing of it determines which rate structure applies, and the difference is large enough to actively plan around.

Short-term means you held the asset for one year or less. Short-term gains are taxed as ordinary income, at your regular federal income tax bracket, the same rates that apply to your salary. Depending on your total income, that can mean paying anywhere from 10% up to 37% on a short-term crypto gain.

Long-term means you held the asset for more than one year. Long-term gains get preferential rates: 0%, 15%, or 20%, depending on your total taxable income for the year. For 2026, the 0% bracket covers taxable income up to $49,450 for single filers ($98,900 married filing jointly); the 15% bracket runs from there up to $545,500 single ($613,700 MFJ); anything above that is taxed at 20%. These thresholds are adjusted for inflation most years, so treat the exact dollar figures as current for 2026 specifically, not as a fixed number going forward. Higher earners should also be aware of the separate 3.8% Net Investment Income Tax, which can apply on top of the capital gains rate above $200,000 in income for single filers ($250,000 MFJ).

The practical takeaway: selling a position you’ve held for 13 months instead of 11 can genuinely change your tax bill, sometimes substantially, purely because of which side of the one-year line the sale lands on. This is a real, legal reason some traders time a sale around the holding-period threshold, distinct from any judgment about whether the asset itself is still worth holding.

Form 1099-DA: the new broker reporting requirement

Historically, US crypto exchanges weren’t required to send the IRS a standardized report of your trading activity the way a stock brokerage sends a Form 1099-B. That’s changing. Form 1099-DA is a new form specifically for digital assets, and starting with the 2025 tax year, brokers (exchanges and other platforms that meet the definition) are required to report gross proceeds from digital asset sales directly to the IRS, with the form furnished to filers in early 2026. It’s a genuinely recent, still-settling requirement: exchanges are in a transition year, and the IRS has signaled it won’t penalize brokers for good-faith late filing during this first year.

The first year of reporting covers gross proceeds only, not cost basis. Starting with transactions made on or after January 1, 2026, brokers must also begin reporting cost basis for assets acquired and held within the same broker account. In practice, this means the IRS is moving toward the same kind of automatic, third-party matching for crypto trades that’s long existed for stock trades: your exchange is now sending the IRS a copy of largely the same information it’s sending you. That makes underreporting crypto gains a meaningfully worse idea than it may have seemed in earlier years, when enforcement leaned more heavily on self-reporting. It doesn’t change what you actually owe, only how visible the gap between what you owe and what you report has become.

One practical wrinkle worth flagging: 1099-DA cost basis reporting only covers assets bought and sold on the same broker’s platform. If you bought BTC on one exchange, moved it to a different one, and sold it there, the second exchange may not have an accurate cost basis to report, the same reconstruction problem covered in more general terms in the general crypto tax guide. Keeping your own records of purchase dates and prices remains necessary even as broker reporting expands.

Staking and mining rewards: taxed twice, at two different moments

Receiving crypto through staking or mining is treated as ordinary income at the moment you receive it, valued at the fair market price of the crypto at that moment, not the price when you eventually sell it. This is separate and distinct from any later capital gain or loss when you dispose of those rewards.

Concretely: say you receive 0.1 ETH in staking rewards when ETH is trading at $3,000. That $300 worth of ETH is ordinary income for the year you received it, taxed at your regular income tax rate, regardless of what you do with it afterward. If you hold that same 0.1 ETH and later sell it when ETH is at $4,000, you owe capital gains tax on the additional $100 of appreciation (short-term or long-term, depending on how long you held it after receiving it), on top of the income tax you already owed on the original $300. Two separate taxable events, from a single reward, is a common source of confusion for people staking for the first time.

Frequently asked questions

Does moving crypto between my own wallets trigger a taxable event? No. Transferring an asset you own from one wallet or exchange account to another wallet you also control isn’t a disposal; you still own the same asset, just in a different location. It’s still worth logging the transfer for your own records, since it can affect which exchange has an accurate cost basis if you later sell from that wallet.

I only traded crypto for other crypto and never touched dollars. Do I still owe tax? Yes, potentially. Because crypto is property, trading BTC for ETH is a disposal of the BTC, and any gain on that disposal is taxable the same as if you’d sold it for dollars first. “I never cashed out” doesn’t exempt crypto-to-crypto trades from capital gains treatment.

Will Form 1099-DA tell the IRS about my full trading history, including past years? No. 1099-DA reporting applies to transactions going forward, starting with the 2025 tax year, not retroactively to earlier years. It also currently only covers activity that happens through brokers meeting the reporting definition, which doesn’t capture every wallet-to-wallet or DeFi transaction.

Are staking rewards taxed even if I never sell them? Yes. The income tax on staking or mining rewards is triggered by receiving the asset and gaining control over it, not by selling it. Not selling only affects the separate, later capital gains question, it doesn’t undo the income tax owed at receipt.

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