IRS treats cryptocurrency as property, triggering capital gains tax on sales, trades, or spending of Bitcoin (BTC) and Ethereum (ETH). Use the interactive tax calculator below for quick estimates based on 2026 tax rules.
Crypto Tax Calculator
2026 Tax Year • IRS Compliant • Live Preview
IRS Crypto Tax Rules
Cryptocurrency follows capital gains rules: gains equal sale price minus cost basis. Short-term holdings (≤1 year) use ordinary income rates up to 37%; long-term (>1 year) rates are 0%, 15%, or 20% based on income. Starting 2026, brokers issue Form 1099-DA for proceeds (cost basis from 2026).
Taxable Transactions
Tax events include selling BTC/ETH for USD, crypto-to-crypto trades like BTC↔ETH, spending on goods, mining/staking rewards, and airdrops. Non-taxable: buying with USD or wallet-to-wallet transfers. Losses offset gains dollar-for-dollar, with up to $3,000 excess against ordinary income.
2026 Tax Rates Overview
Rates depend on total taxable income; state taxes may apply extra.
Short-Term vs Long-Term Crypto Capital Gains
Short-Term Capital Gains
- Crypto held 1 year or less
- Taxed as ordinary income
- Uses IRS income tax brackets
Long-Term Capital Gains
- Crypto held more than 1 year
- Taxed at preferential capital gains rates
- Lower than ordinary income tax
Semantic triple:
Holding period → determines → crypto tax rate
What Transactions Are Taxable?
The IRS considers the following taxable crypto events:
- Selling Bitcoin or Ethereum for USD
- Trading BTC ↔ ETH
- Spending crypto on goods or services
- Receiving crypto as income
Non-Taxable Events
- Buying crypto with USD
- Transferring crypto between your own wallets
How Crypto Tax Is Calculated
Semantic triple:
Crypto tax → is calculated using → capital gains formula
IRS Formula
Capital Gain or Loss = Sale Price − Cost Basis
Then:
- Apply short-term or long-term tax rate
- Offset gains with losses if applicable
Crypto Losses and Tax Benefits
Crypto losses can be used to offset gains.
Semantic triple:
Capital losses → offset → capital gains
- Losses reduce taxable gains
- Excess losses may offset ordinary income (IRS limits apply)
Crypto Income vs Capital Gains
Not all crypto is taxed as capital gains.
Crypto Income Examples
- Mining rewards
- Staking rewards
- Airdrops
These are taxed as ordinary income at receipt, then capital gains apply if later sold.
Crypto Tax Reporting Forms
Common IRS forms include:
- Form 8949 – Crypto sales & disposals
- Schedule D – Capital gains summary
- Form 1040 – Crypto activity disclosure
Semantic triple:
Crypto transactions → are reported on → IRS tax forms
IRS Enforcement and Compliance
The IRS actively enforces crypto tax compliance through:
- Exchange reporting
- Blockchain analytics
- Information matching
Failure to report crypto transactions can result in:
- Penalties
- Interest
- Audits
Crypto Tax Calculator FAQs
Is Bitcoin taxable in the US?
Yes. Bitcoin is taxed as property under IRS rules.
Is Ethereum taxed differently than Bitcoin?
No. Both follow the same capital gains tax rules.
Do I pay tax if I trade BTC for ETH?
Yes. Crypto-to-crypto trades are taxable events.
Are crypto losses deductible?
Yes, subject to IRS capital loss rules.
Final Summary
Bitcoin and Ethereum are taxed as property, and most crypto transactions trigger capital gains tax. Using a crypto tax calculator helps estimate liability, but final taxes depend on total income and filing status.