Crypto Capital Gains Tax: Rates, Brackets & How It Works (US 2026)

Not tax advice. Rates and thresholds reflect IRS guidance as of our last update. Tax law can change — consult a qualified tax professional for your specific situation.

The IRS taxes crypto gains as capital gains — the same way it taxes gains from selling stocks. The rate you pay depends on two things: how long you held the crypto and your total taxable income for the year.

Short-term vs long-term: the holding period splits your rate

Short-term capital gains apply to crypto sold or traded within 12 months of purchase. These gains are taxed at your ordinary federal income tax rate — the same bracket as your wages.

Long-term capital gains apply to crypto held for more than 12 months before disposal. These rates are substantially lower: 0%, 15% or 20%.

The one-year line is one of the most important facts in crypto tax. Holding for 366 days instead of 364 days can cut your tax rate from 22% to 15% or even 0% on the same gain.

2026 long-term capital gains tax rates (US federal)

The long-term rates are tiered by taxable income. Thresholds are indexed to inflation and adjusted annually by the IRS.

Source: IRS Revenue Procedure 2025-28 (inflation adjustments for 2026). Thresholds apply to taxable income — after standard or itemized deductions. Net Investment Income Tax (3.8%) may apply at higher incomes.

Example: You bought 2 ETH for $2,000 each ($4,000 total) and sold both for $7,000 each ($14,000 total) after holding for 14 months. Your gain is $14,000 − $4,000 = $10,000. If your total taxable income is $80,000 (single), you’re in the 15% long-term bracket. Federal tax owed: $1,500.

2026 short-term capital gains rates (ordinary income)

Short-term crypto gains are added to your ordinary income and taxed at your marginal rate.

Source: IRS Revenue Procedure 2025-28 for 2026 tax year. Rates shown are federal only; state income tax applies separately and varies by state.

Same example, short-term: If you sold that ETH after 11 months instead of 14, the $10,000 gain is short-term. At $80,000 total income (single), you’re in the 22% bracket. Federal tax owed: $2,200 — $700 more for two fewer months of waiting.

What counts as a taxable crypto event?

The IRS considers these events taxable disposals that trigger capital gains or losses:

• Selling crypto for USD or another fiat currency
• Trading one cryptocurrency for another (crypto-to-crypto swaps)
• Using crypto to pay for goods or services
• Receiving payment in crypto (for services rendered — this is ordinary income, not capital gains)

These events generally do not trigger a capital gains event:

• Buying crypto with fiat (this sets your cost basis)
• Transferring crypto between wallets or exchanges you own
• Receiving a loan collateralised by crypto (not a disposal)

Staking rewards and airdrops are typically treated as ordinary income at the fair market value on the date received, then as capital gains when you later sell.

How to calculate your gain: cost basis matters

Your capital gain = proceeds (what you received when you sold) − cost basis (what you paid, including fees).

If you bought the same coin at different prices over time (a common situation), you need an accounting method to determine which “lot” you’re selling. The IRS allows:

• FIFO (First In, First Out) — default if you don’t specify
• LIFO (Last In, First Out)
• HIFO (Highest In, First Out) — often produces the lowest taxable gain
• Specific Identification — you designate exactly which lot you’re selling

Most crypto tax software (Koinly, CoinLedger, CoinTracker) supports multiple accounting methods and calculates your gain under each, letting you pick the most tax-efficient option.

State capital gains tax

Federal rates above are only part of your bill. Most US states also tax capital gains as ordinary income:

• No state income tax (crypto included): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
• Flat rate: Colorado (4.4%), Illinois (4.95%), Pennsylvania (3.07%).
• California: taxed as ordinary income at up to 13.3% — one of the highest in the country.

Your total effective rate = federal long-term/short-term rate + your state rate.

The fastest way to calculate what you owe

Because crypto tax depends on your total income, holding period and cost basis on potentially hundreds of transactions, a spreadsheet quickly becomes impractical. Dedicated crypto tax software like Koinly or CoinLedger imports your exchange transaction history and computes your exact gain under your chosen accounting method.

For a full comparison of software options, see best crypto tax software.

Sources: IRS Revenue Procedure 2025-28 (2026 tax year inflation adjustments), IRS Publication 544 (Sales and Other Dispositions of Assets), IRS Notice 2014-21 (Virtual Currency Guidance). Rates current as of June 2026. Not tax advice.