The IRS treats crypto as property, so every sale, trade, or use is taxable. Here is how short and long-term rates work, and what exchanges now report on Form 1099-DA.
The IRS treats crypto as property, so every sale, trade, or use of crypto is a taxable event. Hold under a year and profits are taxed as ordinary income, from 10 to 37 percent. Hold over a year and you get lower long-term rates of 0, 15, or 20 percent. From 2026, US exchanges report your activity to the IRS on Form 1099-DA.
This is general information, not tax advice. Your bracket and situation are specific to you. Check the IRS digital assets page or a CPA before filing.
Because crypto is property, you trigger tax whenever you dispose of it:
Buying crypto with dollars, holding it, and moving it between your own wallets are not taxable events.
The holding period decides the rate. Held under a year, gains are taxed as ordinary income at 10 to 37 percent. Held over a year, they get preferential long-term rates of 0, 15, or 20 percent. Holding longer is the simplest way most people lower the bill.
Crypto you earn is taxed as ordinary income at its value when you receive it. If you later sell it, you also owe capital gains tax on any change in value after that point. So earned crypto can be taxed twice: once as income, once on the later gain.
From 2026, US centralized exchanges must report customer sales to the IRS on the new Form 1099-DA. The IRS also uses analytics firms and exchange subpoenas. The safe assumption is that the IRS already has a record of your trades, so your return should match.
See which exchanges serve US residents and which payment methods they accept.
Buy crypto in the USYes. The IRS treats crypto as property, so selling, trading, spending, or earning it is taxable. Buying and holding is not.