How to Calculate Crypto Taxes for Gains and Losses 2026
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To calculate US crypto gains and losses, subtract your cost basis from the proceeds for each sale, swap, or other disposal. Then separate the results into short-term gains or losses for assets held for one year or less, and long-term gains or losses for assets held for more than one year.
Crypto received as income, such as staking or mining rewards, is generally valued when you receive it and can control it. That fair market value is also your cost basis if you later sell, swap, or spend the crypto.
Why trust our crypto tax experts
In the US, cryptocurrency is treated like property for tax purposes. If you sell, swap, or spend it, you usually trigger a taxable event.
Staking and mining rewards are usually taxed as ordinary income based on their fair market value when you receive them. This amount becomes your cost basis for future transactions and is important for accurate tax reporting.
Crypto tax basics for US taxpayers
Crypto taxes usually fall into two categories: capital gains or ordinary income. Whether a capital gain is short-term or long-term depends on how long you hold the asset.
The following table provides an overview of US crypto tax consequences for specific events.
Activity | Tax consequences | What you need to track |
Sell crypto for USD | Capital gain or loss | Proceeds, fees, crypto cost basis, holding period |
Swap crypto for crypto | Capital gain or loss | FMV at swap, fees, crypto cost basis of what you gave up |
Spend crypto | Capital gain or loss | Value of what you bought, crypto cost basis, holding period |
Receive crypto for work | Ordinary income | FMV when you control it, timestamp, later disposals |
Receive mining rewards | Ordinary income | FMV when received, timestamp, later disposals |
Receive staking rewards | Often ordinary income | FMV when you control it, timestamp, later disposals |
Note: Tax forms might not always show your cost basis. Keep your own records to make sure your reporting is accurate.
How is cryptocurrency taxed?
In the US, the IRS sees cryptocurrency as property. Selling, trading, or spending it counts as a taxable event. Staking and other rewards are taxed at their fair market value when you receive them. Your tax rate depends on how long you hold the asset:
Short-term profits: Assets held for one year or less, taxed at ordinary income rates (10-37%)
Long-term profits: Assets held for more than a year, taxed at preferential rates (0-20%)
The IRS taxes crypto staking rewards as ordinary income at FMV when you receive and control them, which then becomes your cost basis for later disposals.
Capital gains taxes on cryptocurrency in the US
You pay capital gains tax when you sell or dispose of cryptocurrency, and the amount you get is different from what you paid for it.
Short-term profits: Assets held for one year or less are taxed at ordinary income rates.
Depending on your situation, long-term profits might also be subject to the net investment income tax (3.8%) along with capital gains tax.
Crypto income tax
Crypto income is usually taxed as ordinary income at its fair market value when you receive it and have control over it.
About the 1099-DA for crypto
Covered brokers furnish Form 1099-DA for sales effected in 2025 (statements to taxpayers in early 2026), and brokers are not required to report the basis for 2025 sales. Basis reporting for certain covered transactions becomes mandatory in 2026 and later.
What factors are considered when calculating crypto taxes?
Your crypto tax liability mainly depends on two things:
Realized gains or losses: The difference between proceeds (sale price) and crypto cost basis (purchase price).
Holding period: Short-term profits apply to assets held for one year or less; long-term gains apply to assets held for more than one year.
Trading one cryptocurrency for another or using crypto to make purchases also counts as a taxable event. Here’s a simple example of how crypto tax is calculated for US taxpayers.
Crypto tax calculation example
You purchase $20,000 of Ethereum and later trade it for $30,000 worth of Bitcoin, resulting in a short-term gain of $10,000.
A few months later, you use the Bitcoin, now valued at $60,000, to purchase a car. This results in a gain of $30,000.
In this example, your total short-term taxable gains would be $40,000.
Pro tip
Use and bookmark our free crypto tax calculator to get a quick look at your crypto taxes, realized or speculative. This is a great tool to use time and again as you prepare for tax season and develop your crypto strategy.
How is profit on cryptocurrency calculated?
To figure out your crypto profit, use this simple formula:
Profit = Proceeds - Cost Basis
Crypto profit calculation example
If you buy Ethereum for $10,000 and sell it for $15,000, your profit is $5,000. You can add transaction fees to your cost basis, which lowers your taxable gains.
What triggers a taxable crypto event in the US?
Taxable crypto events usually come from selling, trading, or earning crypto. Here are the most common triggers:
General crypto capital gains events for US taxpayers
Selling cryptocurrency for USD
Swapping one coin for another
Spending crypto on goods or services
General crypto income events for US taxpayers
Receiving crypto as payment for services
Receiving crypto staking rewards
Receiving crypto mining rewards
Receiving a crypto airdrop, depending on facts and your ability to control the crypto
Pro tip
Moving crypto between wallets you own is usually not taxable. Still, keep good records so these transfers aren’t mistaken for sales, which could raise your audit risk.
How to calculate crypto gains and losses
To calculate crypto gains and losses, track all your transactions, figure out the cost basis for each asset, and compare the sale price to what you paid. You have a gain if you sell for more than you paid, and a loss if you sell for less.
To make calculating gains and losses easier, keep detailed records of when you bought and sold, plus any transaction fees. Our free crypto profit calculator can help you with these calculations in real time.
Tracking crypto transactions
It’s important to track your crypto transactions accurately. Make sure to record these details:
Purchase and sale dates
Cost basis (purchase price)
Proceeds (sale price)
Transaction fees
Always keep your own records and don’t rely only on platforms for accurate reporting, especially if you use DeFi or have accounts on multiple exchanges and wallets.
Finding your cost basis
Once you’ve tracked your transactions, figure out the cost basis. This is the original value of your crypto, including any fees you paid.
The accounting method you pick will affect how your gains are calculated.
FIFO: First-in, first-out. The oldest assets are sold first.
LIFO: Last-in, first-out. The newest assets are sold first.
HIFO: Highest-in, first-out. Most expensive assets are sold first.
TokenTax’s crypto tax software enhances the standard HIFO method with our proprietary Minimization accounting method, which considers your individual tax rate to reduce taxable gains as effectively as possible.
The following table summarizes crypto cost basis methods for easy reference.
Method | Meaning | What it does | Where you’ll see it most |
FIFO | First in, first out | Sells the oldest units first | Common default method in many tools |
LIFO | Last in, first out | Sells the newest units first | Often used as a lot-selection approach |
HIFO | Highest in, first out | Sells the highest-cost units first | Often used to reduce gains when records support it |
ACB | Adjusted cost base | Average cost across units | Used in some international systems (see Canada) |
Note: TokenTax uses a special Minimization algorithm to help you find which holdings will give you the lowest tax bill.
How accounting methods affect crypto gains (FIFO vs LIFO vs HIFO)
The accounting method you use can make a big difference in your taxable gains or losses. Here’s an example:
Imagine you own 3 BTC, purchased as follows:
1 BTC bought in 2018 for $8,000
1 BTC bought in 2021 for $50,000
1 BTC bought in 2022 for $19,000
In 2023, you sell 1 BTC for $23,000. The capital gain or loss varies depending on the accounting method used:
FIFO (First In, First Out): The oldest BTC (purchased at $8,000) is sold first.
Gain = $23,000 - $8,000 = $15,000
LIFO (Last In, First Out): The most recent BTC (purchased at $19,000) is sold first.
Gain = $23,000 - $19,000 = $4,000
HIFO (Highest In, First Out): The BTC with the highest purchase price ($50,000) is sold first.
Loss = $23,000 - $50,000 = -$27,000
Choosing the right accounting method can help you lower your taxable gains or increase your deductible losses. TokenTax’s crypto tax software lets you apply and compare methods like FIFO, LIFO, or HIFO to get the best tax result.
Cost basis calculation example
Cost basis is the original value of an asset when you receive it, including any fees you paid to buy it. Getting the cost basis right is key to figuring out your taxable gains or losses.
Here’s an example:
Suppose you purchase 1 ETH for $3,000 on an exchange and pay a $100 transaction fee, such as an exchange fee or Ethereum gas fee.
To calculate the cost basis:
Cost Basis = Purchase Price + Transaction Fees
Cost Basis = $3,000 + $100 = $3,100
When you later sell the 1 ETH for $4,000, you calculate your taxable gain as follows:
Gain = Sale Price - Cost Basis
Gain = $4,000 - $3,100 = $900
Transaction fees, such as the $100 in this example, reduce your overall gains by increasing the asset’s cost basis, which can help lower your taxable income.
To figure out your crypto profit, subtract your cost basis (what you paid plus fees) from the proceeds (what you sold it for):
Profit = Proceeds - Cost Basis
For example, if you buy 1 ETH for $3,000 and pay $100 in fees, your cost basis is $3,100. If you sell it later for $4,000, your profit is $900.
How TokenTax can help you calculate crypto taxes for gains and losses
TokenTax offers crypto tax software along with full-service accounting expertise. Our platform tracks transactions, determines cost basis, and calculates gains or losses using multiple accounting methods.
Whether you want automated tax reports or personal help, our crypto tax experts can help you stay compliant and lower your crypto tax bill.
US short-term vs long-term crypto capital gains tax rates
Your crypto tax rate depends on how long you hold your assets:
Short-term profits: Taxed at ordinary income rates (10-37%).
Long-term profits: Taxed at reduced rates (0%, 15%, or 20%).
If you hold your assets for more than a year, you’ll pay less in taxes overall.
How to keep your crypto taxes to a minimum in the US
US taxpayers can lower their crypto tax bill by using these strategies:
Hold assets long-term: Gains from assets held over a year are taxed at lower rates.
Harvest losses: Sell assets that aren’t doing well to offset your taxable gains through crypto tax loss harvesting.
Track fees: Keep a record of transaction and gas fees, since they can affect your proceeds and cost basis.
Donate crypto: Giving crypto to qualified charities can help lower your tax bill.
Make smart calculations: Strategize and make smart decisions: calculate your crypto taxes with our free calculator to plan.
How to calculate your crypto taxes FAQs
How is a crypto gain or loss "realized"?
How does the IRS tax crypto in the US?
What crypto tax rate will I pay in the US?
Are crypto-to-crypto trades taxable in the US?
How do you calculate crypto gains and losses?
What is a cryptocurrency portfolio tracker?
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