United States

The IRS has issued foundational crypto guidance — Notice 2014-21 establishing property classification, Revenue Ruling 2019-24 addressing hard forks and airdrops — but the framework remains incomplete for DeFi, staking at scale, NFTs, and cross-chain activity. Legislation in the form of the Infrastructure Investment and Jobs Act (2021) expanded broker reporting requirements to cover crypto, and the broker reporting regulations (finalised 2024) have clarified some areas while creating new controversy around the definition of "broker" for decentralised protocols. The overall framework is functional but still evolving, and significant grey areas remain for complex on-chain activity.

Core Tax Treatment

The IRS classifies cryptocurrency as property. Every disposal — selling for fiat, swapping for another token, spending on goods or services, or gifting above the annual exclusion — is a taxable event requiring computation of gain or loss. There is no de minimis exemption: a $5 coffee purchased with Bitcoin must technically be reported as a disposal. This per-transaction reporting requirement, applied to potentially hundreds or thousands of annual transactions for active participants, creates the highest compliance burden of any major jurisdiction.

Short-Term vs Long-Term Rates

The holding period determines the applicable rate. Assets held for 12 months or less are taxed at ordinary income rates of 10–37% depending on total taxable income. Assets held for more than 12 months qualify for long-term capital gains rates of 0%, 15%, or 20% — plus a 3.8% Net Investment Income Tax for high earners (AGI above $200k single / $250k joint). The difference between short-term and long-term treatment is the most powerful planning lever in the US system.

Income Events

Staking rewards, mining income, airdrops, and DeFi lending interest are all taxable as ordinary income at the fair market value in USD when received. This creates a two-stage liability for yield-generating activity: ordinary income tax at receipt, then capital gains tax on any appreciation when eventually sold. The IRS's position on staking rewards was confirmed in Rev. Rul. 2023-14: tokens received as staking rewards are taxable income at the time of receipt, not deferred until sale.

Cost Basis Methods

The IRS permits FIFO (First In, First Out), LIFO (Last In, First Out), or Specific Identification. The choice materially affects tax liability. LIFO typically minimises gains in rising markets by matching the most recently acquired (higher-cost) lots against disposals first. Specific Identification offers the most flexibility — selecting the highest-cost lots for disposal — but requires adequate documentation at the time of each transaction, not retroactively. The method must be applied consistently; switching requires IRS approval.

Tax-Loss Harvesting

Cryptocurrency is currently not subject to the wash sale rule that applies to securities. The wash sale rule prevents claiming a tax loss on a security if you repurchase the same or substantially identical security within 30 days before or after the sale. Because crypto is property rather than a security, you can sell at a loss, immediately rebuy the same asset, and still claim the loss against other gains. This is one of the few structural advantages in the US system. Legislation to extend the wash sale rule to crypto has been repeatedly proposed but not enacted as of 2026; the position should be monitored.

State Taxes

Federal rates are only part of the picture. Most states tax crypto gains as ordinary income, adding 0%–13.3% on top of federal rates depending on location. Nine states have no income tax (Florida, Texas, Wyoming, Nevada, South Dakota, Alaska, Tennessee, New Hampshire, Washington — though Washington has a 7% capital gains tax on gains above $270,000). Moving states during a tax year may create obligations to multiple jurisdictions. High-tax states like California (13.3%) and New York (up to 10.9%) materially increase the total effective rate for residents.

Reporting and 1099-DA

All taxable disposals must be reported on Form 8949, summarised on Schedule D, and included in Form 1040. The filing deadline is 15 April, with an automatic extension to 15 October available. From tax year 2025, US crypto exchanges are required to issue Form 1099-DA to customers, reporting gross proceeds from disposals. This formalises the exchange-level reporting infrastructure that the IRS has been building through summonses and voluntary disclosure programmes since 2019. The combination of 1099-DA reporting, existing exchange data summons authority, and international data sharing under CARF (committed by 2027) means non-compliance is increasingly detectable.