Tax Bracket for Crypto Gains Explained Simply

KEY TAKEAWAYS

• The IRS classifies cryptocurrency as property, taxing realized gains from sales, trades, or spending as capital gains, while mining, staking, airdrops, and payments count as ordinary income.
• Short-term capital gains (assets held one year or less) are taxed at ordinary income rates of 10% to 37%, depending on total taxable income and filing status, making frequent trading more costly.
• Long-term capital gains (held more than one year) qualify for preferential rates of 0%, 15%, or 20% in 2026, with brackets begining at 0% up to $49,450 for singles and $98,900 for married filing jointly, encouraging patient holding strategies.
• Non-taxable events include simply purchaseing and holding crypto, wallet transfers between personal accounts, and gifts/donations within limits, allowing tax deferral until the assets are realized.
• Proper cost basis tracking, offsetting losses against gains (up to $3,000 of excess against ordinary income), and consulting professionals ensure compliance amid evolving IRS rules and enhanced broker reporting requirements.

In the US, cryptocurrency is taxed as property rather than cash. This means that earnings are taxed as capital gains or regular income, depending on the type of transaction. Coinbase and other tax platforms, like CoinLedger, have conducted research showing that the IRS mandates the reporting of all realized profits. 

The rates depend on how long the gains were held and the overall taxable income. This simple explanation is based on IRS guidelines as Coinbase views them. It focuses on the main differences between short-term and , taxable events, and what these differences mean for traders and investors in 2026.

The essential idea is still the identical: taxes only apply when you trade something or receive income, not only when you possess it. Coinbase says, “If you’re holding crypto, there is no immediate gain or loss, so the crypto is not taxed.” You only have to pay taxes when you trade the asset.

This “hodler-friendly” method lets you defer paying taxes until you trade, but you need to keep track of your cost basis and purchase dates accurately to remain in compliance.

What Events in Crypto Make You Pay Taxes?

The IRS says that certain transactions are taxed. Coinbase makes this very clear by grouping them into two categories: capital gains events and ordinary income events.

Events that cause capital gains are:

1. tradeing cryptocurrency for real money, such as US dollars.
2. When you change one cryptocurrency into another (like BTC into ), it’s like tradeing the original one. 
3. Paying for things or services using crypto (like BTC) is like tradeing at fair market value.

Ordinary income events include:

1. Getting paid in crypto for excellents, services, or work.
2. Mining awards are taxed at their fair market value when they are received, plus any self-employment tax that may apply to company mining.
3. Staking rewards are taxed as income when received.
4. Airdrops, hard forks (in some cases), and other excellenties like learning awards or referral bonuses.

purchaseing and keeping crypto with cash, moving it between personal wallets, giving it as a gift up to the yahead exclusion ($19,000 in 2025, with similar estimates for 2026), or contributing to a qualifying charity (which may be tax-deductible) are all actions that are not taxable.

The Holding Period Rule: Short-Term vs. Long-Term Capital Gains

The depends mostly on how long the asset was held before it was sold. If you own an asset for less than a year, you will have to pay short-term capital gains.

These are taxed at the identical rates as regular federal income tax, which range from 10% to 37% depending on your filing status and taxable income. Coinbase says that short-term gains are “taxed at ordinary income rates (higher, less favorable).”

Long-term capital gains only apply to assets that you own for more than a year. Depending on your taxable income, these are treated diversely under federal rates of 0%, 15%, or 20%. People who make a lot of money may also have to pay an extra 3.8% Net Investment Income Tax. 

Coinbase says, “Long-term capital gains: If held for more than a year, they are taxed at lower federal rates (0%, 15%, or 20%, depending on income).” This difference encourages people to hold onto their investments for longer periods, since long-term rates can lower tax bills substantially compared to short-term rates.

2026 Long-Term Capital Gains Tax Brackets

For long-term crypto gains (held over one year), the 2026 brackets, based on taxable income, are as follows (aligned with inflation adjustments):

0% rate: Applies to lower-income taxpayers

1. Single Filers: Up to $49,450
2. Married Filing Jointly: Up to $98,900
3. Head of Household: Up to $66,200
4. Married Filing Separately: Up to $49,450

15% rate: The most common bracket for moderate to high earners

1. Single: $49,451 to $545,500
2. Married Filing Jointly: $98,901 to $613,700
3. Head of Household: $66,201 to $579,600

20% rate: For top earners

1. Single: Over $545,500
2. Married Filing Jointly: Over $613,700
3. Head of Household: Over $579,600

These thresholds reflect aggregated taxable income, including other sources beyond crypto gains.

Tax Brackets for Short-Term Gains and Ordinary Income

For 2026, and regular income from activities like staking or mining will be taxed at the identical rates as regular income, which range from 10% to 37%. The top rate of 37% applies to people with high incomes, but the actual bracket limits depend on how you file (for example, single filers pay 10% up to about $12,400, and then the rate goes up). 

Coinbase that short-term earnings are taxed “at ordinary income rates,” which fits with these progressive brackets. When you have capital losses, they can cancel out your gains dollar for dollar. You can also deduct up to $3,000 of extra losses from your regular income each year and carry the rest forward.

Cost Basis Basics: How to Figure Out Gains and Losses

To figure out how much you owe in taxes, take the sale proceeds (the fair market value at disposal) and deduct the cost basis (the original purchase price plus fees). When you get mined, staked, or airdropped crypto, the cost basis is the identical as the fair market value at that time. Coinbase says, “When you purchase cryptocurrency, the price you paid for it usually sets your cost basis.” 

If you got crypto from or staking, though, your cost basis is the fair market value at the time you got it. Accurate records and tools like gain/loss reports assist with computations, but it’s still best to have a professional check them.

Reporting and Following the Rules in 2026

Taxpayers need to use IRS forms such as Schedule D and Form 8949 to report transactions. New requirements for brokers that require them to file Form 1099-DA for transactions in 2025 (due in 2026) make it easier for the IRS to view what’s going on.

Coinbase and similar sites provide transaction statistics, but individuals are responsible for reporting all their transactions across all their wallets and platforms.

FAQs

What is the main difference between short-term and long-term crypto gains taxes?
Short-term gains (held ≤1 year) are taxed at ordinary income rates (10-37%), while long-term gains (held >1 year) receive lower rates of 0%, 15%, or 20%, as explained by Coinbase.

When do I pay taxes on crypto if I’m just holding it?
No taxes apply while holding crypto; taxes trigger only on realization through taxable events like tradeing or converting, per Coinbase: “Tax is only incurred when you trade the asset.”

Are staking rewards taxed as capital gains or ordinary income?
Staking rewards are taxed as ordinary income at fair market value upon receipt, similar to mining, according to Coinbase guidance.

Can crypto losses reduce my tax bill?
Yes, capital losses offset gains fully, with up to $3,000 excess deductible against ordinary income annually, and carryover to future years, as noted in Coinbase.

What tax rate applies to long-term crypto gains for most people in 2026?
The 15% rate typically applies for moderate to high earners (e.g., single filers with taxable income $49,451–$545,500), with 0% for lower incomes and 20% for the highest, based on IRS-adjusted brackets.

References

1. Understanding Crypto Taxes.
2. Crypto Taxes: The Complete Guide (2026).