Short-term vs. long-term gains explained


A short term gain or loss occurs when a capital asset, in this case cryptocurrency, is bought and then sold or exchanged within one calendar year.

Short-term capital gains are subject to the taxpayer's marginal tax rate. This is the rate the taxpayer pays for income and includes federal, state, and local income taxes. These rates can range anywhere from 0% to over 50% depending on where you live and how much you earn.


A long-term gain occurs when a capital asset — like cryptocurrency — is bought and then sold or exchanged after one calendar year. For example, if you bought bitcoin on January 1st, 2012 (you're a genius) and you sell that coin on January 1st, 2013, then you would have a long term gain.

Long-term capital gains are subject to the taxpayer's long-term capital gains rate.

  • For taxpayers in the 0% or 10% Federal Tax brackets, their Federal long-term rate is 0%.

  • For taxpayers in the 15% to 35% tax Federal Tax brackets their Federal rate would be 15%.

  • For taxpayers in the highest Federal bracket of 39.6%, their Federal long-term rate would be 20%.

On top of the federal rates of 0%, 15%, and 20%, there are also state and local long-term capital gains taxes. For example, in New York, your long-term rate can be as high as 31.5% (20% + 11.5% New York state rate), and in California, it's even worse with rates on long-term gains reaching as high as 33%.

Do I sell short-term or long-term?

TokenTax's minimization algorithm looks at your tax rates on short and long term gains and calculates the best gains to take. There are cases where you may pay less taxes by having a smaller short-term gain rather than a larger long-term gain, for example. TokenTax will help you best navigate tax situations like this.

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