US Crypto Taxes in 2025: What You Need to Know
If you’re trading, holding, or earning from cryptocurrency in the US, it’s important to understand how the IRS treats your digital assets in 2025. The rules are becoming stricter, reporting requirements are expanding, and mistakes could be costly. This guide breaks down the essentials—tax rates, deadlines, IRS updates, and practical strategies to help you stay compliant without paying more than you should.
Key Points at a Glance
-
The IRS sees crypto as property, not currency.
-
Short-term gains (under 12 months) are taxed at regular income rates (10%–37%).
-
Long-term gains (over 12 months) qualify for reduced rates (0%, 15%, or 20%).
-
Tax filing deadlines for crypto match traditional income—April 15, 2025 is the big date.
-
Starting January 2025, brokers must send the IRS a new form (1099-DA) for crypto sales.
-
By 2026, FIFO (First-In, First-Out) will be the required method to calculate gains.
How Crypto Is Taxed in the US
Whenever you sell, trade, or spend cryptocurrency, you create what’s called a taxable event.
-
If you profit, it’s a capital gain.
-
If you sell at a loss, you have a capital loss.
The tax you pay depends on how long you held the asset:
-
Less than one year → Short-term → Higher rates (10%–37%).
-
More than one year → Long-term → Lower rates (0%, 15%, or 20%).
👉 Example: Selling Bitcoin after 8 months is short-term; selling after 18 months is long-term.
Capital Gains vs. Losses
-
Gain: Sold for more than you paid.
-
Loss: Sold for less than you paid.
Losses aren’t wasted—you can use them to reduce other gains, and even offset up to $3,000 of regular income each year.
Tax Brackets in 2025
The US uses a progressive system. That means only the portion of your income that falls into a bracket is taxed at that rate—not your entire income.
✅ Example: If you make $50,000, part is taxed at 10%, part at 12%, and the rest at 22%. Your effective rate is lower than your highest bracket.
Calculating Your Crypto Taxes
To find out how much tax you owe, use this formula:
Capital Gain/Loss = Fair Market Value (when you sold) – Cost Basis (what you paid).
For now, you can choose different methods (FIFO, HIFO, Specific Identification, Average Cost). But starting 2026, FIFO will be the only option.
That’s why keeping good records of all trades—dates, purchase price, sale price, and fees—is critical.
Deadlines You Shouldn’t Miss
-
April 15, 2025 – Regular tax filing deadline.
-
June 15, 2025 – For Americans living abroad.
-
October 15, 2025 – Final deadline if you requested an extension.
Ways to Reduce Your Crypto Tax Bill
You can’t avoid taxes, but you can lower them legally:
-
Hold longer: Keep assets over a year to qualify for lower long-term rates.
-
Harvest losses: Sell assets at a loss to offset gains.
-
Deduct expenses: If you mine or run a crypto business, related costs may be deductible.
-
Donate crypto: Gifts to registered charities may qualify for deductions.
-
Use retirement accounts (IRAs): Consider crypto investments in tax-advantaged accounts.
IRS Forms for Crypto Taxes
Here are the main forms crypto investors deal with:
-
Form 1040 – Main income tax return.
-
Schedule D – Capital gains and losses summary.
-
Form 8949 – Detailed list of transactions.
-
Form 1099-K / 1099-B – Sent by some exchanges.
-
Form 1099-DA – New in 2025, mandatory for brokers reporting digital asset sales.
Taxable vs Non-Taxable Events
Taxable Events
-
Selling crypto for fiat (like USD).
-
Trading one crypto for another.
-
Using crypto to pay for goods or services.
-
NFT sales.
-
Rewards: mining, staking, airdrops, referral bonuses, DeFi income.
Non-Taxable Events
-
Buying crypto with cash.
-
Simply holding crypto (HODLing).
-
Wallet-to-wallet transfers.
-
Using crypto as collateral for a loan.
-
Receiving or giving crypto as a gift.
-
Donating crypto to an eligible charity.
FAQs
Is crypto taxed the same as stocks?
Not exactly. It’s taxed as property, but reporting looks similar.
Can the IRS really track crypto?
Yes. Exchanges report to the IRS, and blockchain analytics make transactions traceable.
What if I don’t report my crypto trades?
You risk audits, penalties, interest, and in serious cases, criminal charges.
Which exchanges report to the IRS?
All major US exchanges already do, and with the new 1099-DA form, reporting is becoming standard.
Final Thoughts
Crypto taxes in the US are tightening in 2025. The new Form 1099-DA is a sign of increased IRS oversight, and the mandatory FIFO rule in 2026 means investors need to plan ahead.
Keep accurate records, understand which events are taxable, and consider using tax software or professional help to stay compliant—and avoid overpaying.