Where 2026 finds you
US crypto taxation is mid-transition, and knowing which stage applies to you settles half the questions people ask:
- Tax year 2025 (returns filed spring 2026, extensions running to October 15, 2026): the first year brokers issued Form 1099-DA — gross proceeds only, no cost basis.
- Tax year 2026 (the year you are in now): brokers begin tracking cost basis for covered assets — generally crypto bought at that broker on or after January 1, 2026 and kept there.[3]
- Anything bought earlier, or moved between wallets and exchanges, stays your job to document. The broker form will not know its basis; your records have to.
The practical takeaway
None of this changed what is taxable — that has been settled since 2014. What changed is how much of your activity the IRS sees independently of you. Matching starts with their copy, not yours.
Property, not currency
Since Notice 2014-21, the IRS has taxed digital assets as property. Every disposition — selling for dollars, swapping token for token, spending crypto on goods or services — is a taxable event measured at fair market value in dollars at the time. Buying and holding, or moving assets between your own wallets, is not a disposition. Meanwhile, crypto that arrives as a reward — mining, staking, many airdrops, payment for work — enters as ordinary income when received.[1]
Quick-reference table
| Event | Taxable? | Bucket | Notes |
|---|---|---|---|
| Buy with dollars and hold | No | — | Record date and cost basis. |
| Sell for dollars | Yes | Capital gain/loss | Short-term or long-term by holding period. |
| Swap crypto for crypto | Yes | Capital gain/loss | Fair market value at the time of the swap. |
| Spend crypto | Yes | Capital gain/loss | Treated as a disposition at payment time. |
| Staking rewards | Yes | Ordinary income | At dominion and control (Rev. Rul. 2023-14). |
| Airdrops / hard forks | Yes | Ordinary income | When you can dispose of the tokens (Rev. Rul. 2019-24). |
| Mining rewards | Yes | Ordinary income (possibly self-employment) | Fair market value at receipt. |
| Paid in crypto | Yes | Wages / ordinary income | Withholding applies for employees. |
Short-term vs long-term
The dividing line is whether you held the asset more than one year:
- Short-term (one year or less): taxed with your ordinary income at 2025 federal rates of 10%–37%.
- Long-term (more than one year): preferential rates of 0% / 15% / 20%, set by your taxable income and filing status.
- Capital losses offset capital gains first; a net loss can offset up to $3,000 of ordinary income per year ($1,500 married filing separately), with the rest carried forward.[2]
- Higher earners may also owe the 3.8% net investment income tax on top.
2025 long-term thresholds (single filer)
| Taxable income (USD) | Long-term rate |
|---|---|
| 0 – 48,350 | 0% |
| 48,351 – 533,400 | 15% |
| Above 533,400 | 20% |
Forms, the digital asset question, and the 1099-DA
- Form 8949 lists each disposition; totals flow to Schedule D.
- Ordinary income from staking, airdrops or mining goes on Schedule 1 — or Schedule C if the activity is a business (self-employment tax may follow).
- The digital asset question at the top of Form 1040 must be answered by every filer, crypto or not.[1]
- Form 1099-DA: brokers report digital asset sales starting with 2025 transactions — gross proceeds first, with cost basis phasing in for covered assets acquired from January 1, 2026. The IRS granted transition relief for brokers making good-faith efforts on 2025 reporting.[3]
Wallet-by-wallet basis: the quiet rule change
Alongside broker reporting, Rev. Proc. 2024-28 ended the old habit of treating all your holdings as one big pool: from January 1, 2025, basis must be tracked per wallet or account. If you have coins scattered across exchanges and self-custody, which wallet a sale comes from now changes the math. This is a records problem before it is a tax problem — organize first, then calculate. Our record-keeping guide covers the fields that matter.
Common mistakes
- Skipping the digital asset question — it is mandatory for everyone, and a blank answer draws attention all by itself.
- Ignoring crypto-to-crypto and stablecoin swaps — every one is a disposition at fair market value.
- Waiting to sell before recognizing staking rewards — income lands at dominion and control, not at sale.
- Filing straight from the 1099-DA — early forms may carry proceeds without basis. Supply basis from your own records, or the math treats it as zero and inflates your gain.
- Confusing a filing extension with a payment extension — October 15 extends the paperwork, not the payment; tax owed still runs from April 15, with interest and penalties after.
- Forgetting state taxes — everything here is federal; your state may differ.
FAQ
I only bought and held all year. How do I answer the digital asset question?
Do I report swaps where I never received dollars?
When are staking rewards taxed?
My 1099-DA shows proceeds but no basis. Is the IRS taxing me on the full amount?
Official sources
- [1] IRS, Digital assets — irs.gov/filing/digital-assets
- [2] IRS, Topic no. 409, Capital gains and losses; Rev. Proc. 2024-40 — irs.gov/taxtopics/tc409
- [3] IRS, About Form 1099-DA — irs.gov/forms-pubs/about-form-1099-da
Federal figures for tax year 2025, checked against the official pages on 1 September 2026. State taxes excluded. The IRS’s pages take precedence if they have since changed.
Before you rely on any of this
General information only — not advice for your situation, not the IRS’s voice, and silent on state taxes and nonresident rules. For real numbers, use a CPA or an enrolled agent.