Disclaimer: The article is for general informational purposes and does not constitute tax, legal, financial, or accounting advice. Furthermore, the crypto taxation regulatory landscape is still evolving within the U.S. and could change base
By Corey Barchat
Published on Oct 16, 2025
Last modified on Oct 16, 2025
Disclaimer: The article is for general informational purposes and does not constitute tax, legal, financial, or accounting advice. Furthermore, the crypto taxation regulatory landscape is still evolving within the U.S. and could change based on future IRS or Congressional guidance. The information in the article is not intended to be a substitute for consulting with a qualified tax advisor.
In 2025, an estimated 14% to 28% of American adults (up to 65 million people) hold or use digital assets. Collectively, U.S. investors hold hundreds of billions of dollars worth of crypto, making the country one of the largest markets for cryptocurrency worldwide.
But as cryptocurrency adoption grows, so too does government attention. The IRS is keeping a close eye on the industry and continues to expand the scope of tax reporting rules to ensure taxpayers accurately report their gains, losses, and crypto income.
Whether you’re buying your first Bitcoin, actively trading digital assets, or exploring decentralized finance (DeFi), understanding how crypto is taxed is non-negotiable for every investor.
This guide breaks down how crypto taxation works in the United States, the types of taxable events, and tips to help stay compliant this tax season.
In the U.S., the Internal Revenue Service (IRS) classifies cryptocurrency as property, not currency. Per the IRS, a digital asset is classified as an asset "stored electronically and can be bought, sold, owned, transferred or traded."
Accordingly, this means crypto is taxed much like stocks or real estate. Any time you sell, trade, or otherwise dispose of crypto, you could trigger a capital gain or loss. This classification is important because it determines how your crypto activity is reported, how gains are calculated, and which tax rules apply to your transactions.
These taxable events are typically reported on Form 8949 (Sales and Other Dispositions of Capital Assets) and summarized on Schedule D, Form 1040 of your federal income tax return.
So, what does this all mean for the average crypto user? In short, while buying and holding crypto through platforms like MoonPay isn’t taxable, selling, trading, or spending your crypto can be.
The question of crypto taxes depends on what kind of activity you’re doing. Every taxable event involves one of two things: capital gains or ordinary income. Let’s look at both categories.
In the United States, when you sell or exchange crypto for more than you originally paid (your “cost basis”), you’ll need to pay capital gains tax. These events include:
If you "HODL" your crypto too long and sell it for less than your purchase price, the good news is that the capital loss can actually offset other capital gains (or even lower your overall taxable income via tax loss harvesting).
When it comes to tax rates, the amount of time you’ve held your crypto also matters:
For 2025, here are the long-term capital gains rates:
Tax Rate | Single Filing | Married (Joint) | Married (Separate) | Head of Household |
0% | $0–$48,350 | $0–$96,700 | $0–$48,350 | $0–$64,750 |
15% | $48,351–$533,400 | $96,701–$600,050 |
Pro tip: Holding your crypto for more than a year before selling often results in lower taxes.
Certain crypto activities generate ordinary income, which is taxed at your regular income tax rate. Common income-based crypto activities include:
Pro tip: Income from crypto may push you into a higher tax bracket, so be sure to account for it when estimating your tax liability.
Not every crypto activity results in taxes. For instance, you won’t owe the IRS when you:
Pro tip: Even with non-taxable events, you should still keep records in case you later sell or trade the assets.
Calculating your crypto taxes comes down to understanding how much you earned, how much you spent, and how long you held your assets.
Your cost basis is the amount you originally paid (in USD) for the crypto, including fees.
If you received the asset via mining, staking, or an airdrop, your cost basis equals the fair market value at the time of receipt.
Let’s say you bought 0.01 BTC when Bitcoin was trading at $100,000 using MoonPay, and you paid a $5 transaction fee.
Your total cost basis would be $1,005 ($1,000 purchase + $5 fee).
If you later sell that BTC for $1,200, your capital gain would be $195.
Suppose you earned 5 SOL as a staking reward when Solana was trading at $100.
Your cost basis would be $500 (5 × $100), representing the fair market value at the time you received it.
If you later sell that SOL for $150 each, you’'d report a $250 gain in total.
When you sell, subtract your cost basis from your sale price to determine whether you have a gain or loss.
If you bought 1 ETH for $3,000 and later sold it for $4,000:
Congratulations, you have a $1,000 gain, which is subject to capital gains tax.
If you bought 0.05 BTC for $5,000, but later sold it for $4,500:
You’ve realized a $500 loss, which you can use to offset other gains or even reduce your taxable income by up to $3,000 per year (more on that below).
After calculating your return on investment and determining whether you have gains or losses, next it’s time to report crypto income to the IRS using the appropriate forms.
Crypto activity is reported on the following IRS forms:
Pro tip: Visit irs.gov for the latest guidance on federal income taxes and digital asset reporting.
The IRS is taking crypto more seriously than ever. Starting in 2025, the new Form 1099-DA (Digital Asset Information Return) will require crypto brokers and exchanges to report transactions directly to the IRS.
Every tax return now includes a specific question about digital assets that every taxpayer must answer:
“At any time during the tax year, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
You’re required to answer “Yes” if you participated in any taxable crypto activities, such as receiving, selling, or trading digital assets. You must answer “No” only if you didn’t engage in any crypto transactions that year.
To help stay compliant, investors should keep detailed records of all crypto transactions, including the date, value, and purpose of each one. Reputable crypto tax software can also help with accurate crypto tax reporting and simplify the filing process. And if you’re unsure about how to report certain transactions or calculate your gains, consult a tax professional who’s familiar with digital assets and IRS guidance.
We’ve covered examples of cost basis, capital gains, and losses. Now let’s look at a full-year scenario to see how it all comes together.
Let’s say that within one year you’ve done the following:
Cost basis:
Your original cost basis for Bitcoin was $100,000 per BTC (or $10,000 for each 0.1 BTC since you purchased 0.5 BTC in total).
Tax impact:
Your total taxable gain for the year: $9,000 (1,000 + $8,000)
Note that if you held your BTC for less than a year before selling or spending, those gains would be taxed as short-term capital gains at your regular income tax rate. If you held them for more than a year, they’d qualify for long-term capital gains rates, which are typically lower.
Pro tip: For the exact federal long-term and short-term capital gains brackets, consult the 2025 Capital Gains Tax Rates table above.
Even seasoned investors can slip up when it comes to crypto taxes. Stay organized and pay attention to the small details to save you time and money when it's time to file:
No, buying crypto isn’t a taxable event. You can buy Bitcoin, Ethereum, and other digital assets on platforms like MoonPay without owing taxes right away. Taxes only apply when you sell crypto, swap, trade, or spend your crypto.
Pro tip: Keep your activity organized. Crypto platforms like MoonPay provide clear transaction records and personal history to make filing your crypto taxes easier.
Yes. Selling or exchanging crypto for U.S. dollars (or another cryptocurrency) is a taxable event.
You’ll owe capital gains tax if you sell for more than your cost basis, or you can claim a capital loss if you sell for less.
For instance, if you buy ETH for $3,500 and sell for $4,000, you'll have a $500 taxable gain.
Yes. Crypto you earn through activities like staking, mining, or airdrops is currently considered taxable income.
You’re taxed based on the fair market value of the crypto when you receive it, even if you haven’t sold it yet.
The short answer is yes, usually. Here's a quick summary:
Pro tip: Keep accurate records of your NFT purchase prices, sale amounts, and marketplace fees to report on tax forms.
If you’re simply holding crypto then no, you don’t owe taxes. Tax liability only occurs when you realize a gain, meaning you’ve sold, traded, or spent your crypto.
Pro tip: An easy rule to remember is: No sale, no taxable event.
$48,351 – $300,000
$64,751–$566,700 |
20% | $533,401+ | $600,051+ | $300,001+ | $566,701+ |
