Year-End Crypto Tax Planning Tips for 2026

Year-end crypto tax planning starts before December 31. Review your gains, losses, income, cost basis, and holding periods while there is still time to act. Once the year ends, many tax moves are off the table.

There are a number of ways to legally reduce your taxable income before the year ends and tax season picks up. We’ve compiled a list of some of the most common approaches, all of which are legal and can significantly reduce your final tax liability.

Pro tip
When in doubt, consult a crypto tax professional.

Leverage tax-loss harvesting

Selling positions below cost basis creates losses that offset gains. The wash-sale rule applies to stock and securities, not to crypto you hold directly. It can apply to crypto ETFs and other securities that give you crypto exposure, so check what you are selling before you buy it back.

Contribute to tax-advantaged accounts

• Traditional IRA or HSA cash contributions reduce adjusted gross income.

• Roth deposits don’t cut today’s tax but enable tax-free future growth.

Max out employer plans and other tax-deferred vehicles

401(k)s, SEP-IRAs, and solo 401(k)s shelter future crypto gains inside the plan and lower this year's income. 401(k) contributions have to come out of your pay by December 31, and solo 401(k) employee deferrals generally must be elected by December 31. SEP-IRA and solo 401(k) employer contributions can be made up to your return due date, including extensions. You have until the April filing deadline to make IRA and HSA contributions for the year.

The timing of your crypto transactions can have a significant impact on your final tax bill, particularly regarding short- and long-term capital gains. The difference between short-term and long-term capital gains for US taxpayers is significant. Short-term gains are taxed at ordinary income rates of up to 37%, while long-term gains are taxed at 0%, 15%, or 20%. For more information, refer to the current tax rates for cryptocurrencies.

Consider holding period for long-term capital gains

Coins held for more than one year qualify for federal rates of 0%, 15%, or 20% instead of the ordinary brackets.

Delay gains, accelerate losses (where appropriate)

If you expect a lower bracket next year, you can wait until January to sell a winning position so the gain is taxed next year. Realize losses now to offset current gains and up to $3,000 of ordinary income ($1,500 if married filing separately). Unused losses carry forward to later years.

Choose which units you sell

If your crypto is held at an exchange or other broker, the IRS treats the earliest units you bought as the ones you sold (first in, first out) unless you identify specific units. Choosing higher-cost units can reduce gains or create losses. Under IRS Notice 2026-20, for sales made through December 31, 2026, you can identify units held at a broker in your own books and records, as long as you record the identification no later than the date and time of the sale. Unless the IRS extends this relief, sales after December 31, 2026, will require you to provide the broker with identification or a standing order.

Rewards from staking crypto, liquidity pools, or lending are ordinary income when credited. The IRS has not issued guidance on whether adding or removing liquidity is taxable, so record the amounts you deposit and withdraw. Any subsequent sale of reward coins results in a separate gain or loss. Export your year-to-date data so nothing slips through the cracks.

Deductions can lower your final tax bill, and donating appreciated crypto to a qualified charity can cut your tax and support a cause you care about. Here’s a breakdown of how donating crypto applies to US taxpayers.

Donate appreciated crypto assets

Coins held for more than one year are deductible at fair market value, up to 30% of your AGI for gifts to public charities, and you avoid the embedded gain. Any excess carries forward for five years.

Starting in 2026, itemizers can deduct charitable gifts only to the extent they exceed 0.5% of AGI, and in the 37% bracket the tax benefit of the deduction is capped at 35%. Taxpayers who take the standard deduction can instead deduct up to $1,000 ($2,000 for joint filers) of cash gifts to public charities. That deduction does not apply to crypto donations or to gifts to donor-advised funds.

Bunch donations for larger deductions

Contribute several years of gifts to a donor-advised fund now, itemize this year, then use the standard deduction later. Bunching also means you clear the 0.5% AGI floor once, rather than every year.

Making cash contributions

If a charity cannot accept crypto, convert to cash or use a donor-advised fund that will handle the swap for you.

If you’re a long-term crypto investor, it’s critical to think about the future and future tax implications of your digital assets. There are a number of ways to legally reduce your tax obligations year over year in the long term and to plan ahead for your legacy and the transfer of wealth to future generations. Here’s a look at the basics:

Use the increased estate and gift tax exemption

• Current lifetime exemption. For 2026, the unified federal estate-and-gift tax exemption is $15 million per individual, set by the One Big Beautiful Bill Act. Married couples can combine both exemptions by electing portability on the first spouse's estate tax return (Form 706).

• Gifting crypto. You can transfer coins or tokens directly to heirs or into irrevocable trusts. The gifted assets (and any future appreciation) leave your taxable estate, and your recipient generally takes your crypto cost basis and holding period. If the crypto is worth less than your basis on the gift date, the recipient uses that lower value to figure a loss.

• Annual exclusion still applies. In addition to the lifetime exemption, you may give up to $19,000 per recipient in 2026 without using any of your lifetime amount.

Make use of annual gift exclusions

For 2026, you can give up to $19,000 in crypto per recipient without filing a gift tax return. Splitting gifts with a spouse to give more requires Form 709.

Consider Roth conversions in a low-income year

Moving dollars from a traditional IRA to a Roth lets future appreciation grow tax-free. You pay income tax on the amount you convert, so conversions cost less in a year when your income is lower than usual.

Take qualified charitable distributions (QCDs)

Taxpayers age 70½ or older can send up to $111,000 per person in 2026 from an IRA directly to a public charity. The distribution counts toward your required minimum distribution and is excluded from AGI. Gifts to donor-advised funds do not qualify.

IRA or 401(k) distributions

If your income is unusually low this year, taking an extra distribution can use up the lower brackets before your income rises again.

• Deduct operating costs: electricity, internet, colocation rent, and repair bills.

• Deduct ASIC rigs and other equipment placed in service by December 31 using Section 179 (up to $2,560,000 for 2026) or 100% bonus depreciation, which the One Big Beautiful Bill Act made permanent for qualified property acquired and placed in service after January 19, 2025.

• Prepay expenses (legal, accounting, cloud-hosting fees) to pull deductions into this year.

• Issue Forms 1099-NEC to contractors you pay $2,000 or more for services in the course of your business in 2026, whether you pay in crypto or cash.

• Reconcile wallet balances to the books so year-end financials match blockchain records.

Sometimes the wisest year-end strategy is to do nothing at all. If you believe in your asset's long-term upside, selling simply to lock in a small tax break can leave you with higher future entry prices, lost growth, and additional transaction costs. Weigh any potential tax savings against these factors:

• Future appreciation you might miss while out of the market.

• Long-term capital-gains rates that reward holding past the one-year mark.

• Liquidity needs over the next 12–18 months (emergencies, large purchases, estimated-tax payments).

• Risk tolerance and portfolio mix - diversification may matter more than a short-term write-off. If the numbers show that crypto tax loss harvesting would cut only a modest amount from your tax bill while sacrificing meaningful upside, continuing to hodl could be the better call.

Trades, transfers, and crypto gifts can take time to settle. Run a preliminary report now, plug gaps, and consult a qualified advisor if your situation is complex.

Ty Gaines’ expert take

“Smart crypto tax planning at year-end can reduce your current tax bill and set you up for long-term growth. Reviewing gains, losses, and deductions before December 31st is key.”

- Ty Gaines, EA, Tax Expert at TokenTax