How to Calculate Crypto Taxes for Gains and Losses 2026

To calculate crypto taxes, use one formula on every taxable sale, swap, or spend: proceeds minus cost basis. For crypto you earned, report the fair market value when you received and took control of it. That value becomes the starting basis if you later dispose of it.

In the US, the IRS treats digital assets as property. Buying crypto with dollars and holding it is not, by itself, a tax event. Selling, swapping, spending, or earning it can be.

Crypto taxes fall into two buckets: capital gains or ordinary income. Whether a gain is short-term or long-term depends on how long you held the lot you disposed of. The table below outlines various crypto tax activities. 

A broker form may show proceeds and skip basis. File from your full history, not from the form alone.

The IRS taxes crypto as property, not as currency. A disposal (sale, swap, or spend) creates a capital gain or loss. Rewards are usually ordinary income at fair market value when you can move them.

The crypto tax rate then depends on the bucket and the holding period.

• Short-term gains (held for one year or less) are taxed at ordinary income rates, currently 10% to 37%.

• Long-term capital gains on crypto (held for more than 1 year) are usually taxed at 0%, 15%, or 20%.

• Higher-income filers may also owe the 3.8% net investment income tax.

You have a capital gain when you dispose of crypto for more than your basis. You have a capital loss when you dispose of it for less than its cost.

How much tax on crypto gains you actually pay depends on holding period and the rest of your return. A weekend trade and a two-year hold of the same dollar gain do not get the same rate.

Crypto income is usually taxed as ordinary income at fair market value when you receive it and have control over it. Staking, mining, pay, and many airdrops land here. That same dollar amount is the basis if you later sell, swap, or spend those tokens.

Covered brokers furnish Form 1099-DA for sales made in 2025, with statements to taxpayers in early 2026. For 2025 sales, brokers are not required to report basis.

That is why a 1099-DA can make gains look larger than they are. It often shows gross proceeds rather than your actual gain. Basis reporting for certain covered transactions starts with 2026 activity. Until then, your wallet and exchange history are the source of truth.

Two numbers drive the math: the gain or loss on each disposal, and how long you held that lot.

Trading one coin for another, or using crypto to buy something, is still a disposal. You do not have to cash out to dollars first.

Crypto tax calculation example

You buy $20,000 of ETH and later swap it for $30,000 of BTC. That swap is a $10,000 short-term gain if you held the ETH for one year or less.

A few months later, you spend the BTC, now worth $60,000, on a car. Your basis in that BTC is $30,000 (the value when you received it). The spend is another $30,000 gain.

Total short-term gains in this chain: $40,000, before fees.

Crypto profit calculation example

You buy ETH for $10,000 and sell it for $15,000. Your profit is $5,000 before fees. Add purchase fees to the basis and subtract sale fees from the proceeds, and the taxable amount shrinks.

No. Buying crypto with US dollars and holding it is generally not taxable. You also do not realize a gain just because the price moved.

You can still have a reporting job. If you received staking rewards, an airdrop, or crypto as pay in the same year, those can be income even if you never sold. Use the IRS digital asset question tool before you check the box on Form 1040.

Capital gains events:

• Selling crypto for USD

• Swapping one coin for another

• Spending crypto on goods or services

Income events:

• Crypto as payment for work

• Staking rewards

• Mining rewards

• An airdrop, depending on the facts and when you can control the tokens

Pro tip:  Moving crypto between wallets you own is usually not a sale. Still save both sides of the transfer so the software does not treat it as a sale.

DeFi does not get a special IRS rate. A swap in a pool is still a disposal. A reward token you can claim is usually worth that amount in income. Liquidity deposits and wraps can create extra lots. See our DeFi tax guide when the year is a pile of protocol interactions.

NFT mints and sales follow the same property rules. Paying in ETH to mint can dispose of that ETH. Selling the NFT later is a second event. Creators may have ordinary income on primary sales and royalties. For more details, read our NFT tax guide.

Do the work in this order. The formula stays the same throughout.

• Track every transaction across exchanges, wallets, and on-chain apps.

• Determine the cost basis of the lot you disposed of, including acquisition fees.

• Calculate proceeds: what you received, minus selling fees.

• Subtract basis from proceeds. Positive is a gain. Negative is a loss.

Do it per lot, not as one annual blob.

Tracking crypto transactions

Export CSVs from every exchange. Pull wallet history. If you used DeFi, include swaps, bridges, LP activity, and mints.

Label transfers between accounts you control so they do not appear to be sales. Missing transfers are how basis disappears.

What records should crypto investors keep?

Keep enough to rebuild each line if a 1099-DA is blank on basis:

• Dates and times

• Asset, units, and wallet or account

• USD value at the time

• Fees

• Transaction hashes or trade IDs

• Which lots you identified, if you used specific identification

• Notes that a move was wallet-to-wallet

• Any 1099-DA, 1099-MISC, or other broker form you received

Finding your cost basis

Cost basis is what you paid for the lot, plus eligible buy-side fees. If you earned the crypto, basis is usually the fair market value you already reported as income.

The accounting method decides which lot you sold when you hold more than one. The table below explains the three most common accounting methods. 

TokenTax crypto tax software builds on HIFO with a Minimization method that also looks at your tax rate. Do not assume you can switch methods without the lots to back it up.

How accounting methods affect crypto gains (FIFO vs LIFO vs HIFO)

Say you hold 3 BTC:

• 1 BTC bought in 2018 for $8,000

• 1 BTC bought in 2021 for $50,000

• 1 BTC bought in 2022 for $19,000

You sell 1 BTC for $23,000.

• FIFO sells the 2018 lot. Gain = $15,000.

• LIFO sells the 2022 lot. Gain = $4,000.

• HIFO sells the 2021 lot. Loss = $27,000.

Same sale, and you get three different answers. The method only holds if your records identify the lot.

Cost basis calculation example

You buy 1 ETH for $3,000 and pay a $100 fee. Basis is $3,100.

How is profit on cryptocurrency calculated?

Profit = proceeds − cost basis.

If you want a quick check before you rebuild a whole year, use the free crypto profit calculator.

How TokenTax can help you calculate crypto taxes for gains and losses

TokenTax software imports exchange and wallet history, matches transfers, applies FIFO, LIFO, HIFO, or Minimization, and produces a Form 8949. If the year is missing lots and a 1099-DA with no basis, talk to a crypto tax specialist.

US short-term vs long-term crypto capital gains tax rates

• Short-term: ordinary rates, 10% to 37%.

• Long-term: 0%, 15%, or 20% at the federal level.

• The one-year line is the whole game on rate. Full brackets are on crypto tax rates for 2026.

Legal ways to cut the bill, not loopholes:

• Hold more than a year when that fits the plan.

• Harvest losses to offset gains.

• Keep fees attached to the right buy or sale.

• Donate appreciated crypto to a qualified charity if you were going to give anyway.

• Use specific identification only when the lots are documented.

• Run the free crypto tax calculator before you dump a winner in December.

More tactics are in our “how to reduce your crypto taxes” article.