Understanding US Crypto Tax Rules
The IRS classifies cryptocurrency as property. This means every taxable event — selling crypto, trading one coin for another, or using crypto to buy goods — is subject to capital gains tax.
Short-Term vs Long-Term Gains
If you hold cryptocurrency for one year or less, gains are taxed as ordinary income at your marginal rate (10%–37%). If you hold for more than one year, gains are taxed at preferential long-term capital gains rates (0%, 15%, or 20%).
Step-by-Step: Calculating Your Crypto Tax
- Identify all taxable events — sales, trades, and crypto-funded purchases
- Calculate your cost basis — the original price you paid for the crypto
- Calculate the capital gain or loss — sale price minus cost basis
- Determine short-term or long-term — based on your holding period
- Apply the correct tax rate — based on your income and filing status
Use Our Free Calculator
Our free US crypto tax calculator automatically applies the correct 2024 IRS rates based on your income, filing status, and holding period.