What Is Crypto Tax Rate?

What Is Crypto Tax Rate?

Crypto tax rates depend on how you use cryptocurrency. For instance, when you sell or exchange it, the IRS taxes it as capital gains. Specifically, the rates depend on how long you hold the asset. If you hold it for less than a year, short-term capital gains apply and are taxed as ordinary income (10%-37%). On the other hand, if you hold it for more than a year, long-term capital gains rates (0%, 15%, or 20%) apply. Additionally, cryptocurrency received as income—whether from mining, staking, or payment for services—counts as ordinary income, which is subject to your income tax bracket.

 

 

Capital Gains Tax Rates for Cryptocurrency

Income Level	Short-Term Capital Gains (Held < 1 year)	Long-Term Capital Gains (Held > 1 year)
$0 – $44,625	10% – 12%	0%
$44,626 – $492,300	22% – 35%	15%
Over $492,300	37%	20%

Crypto as Income

Cryptocurrency earned through mining, staking, or as payment for goods and services is taxed as regular income based on its fair market value at the time you receive it. Moreover, this value must be reported as part of your gross income on your tax return.

 

Frequently Asked Questions

 

1. Do I pay taxes when I sell my cryptocurrency?

Yes, the IRS treats cryptocurrency as property, and any sale or exchange is considered a taxable event.

2. Is mining income taxable?

Yes, the fair market value of any cryptocurrency earned through mining must be reported as ordinary income.

3. How do I report my crypto gains and losses?

Use Form 8949 to report capital gains and losses from cryptocurrency transactions, and include Schedule D on your tax return.

4. What happens if I don’t report my cryptocurrency on taxes?

You may face penalties, interest, and audits from the IRS for not reporting cryptocurrency.

5. How do I calculate my crypto capital gains?

Subtract your cost basis from the selling price and report it on Form 8949 and Schedule D.

6. Are crypto-to-crypto trades taxable?

Yes, crypto-to-crypto trades are taxable and must be reported.

If you’re curious about what is crypto tax rate? and how it applies to your situation, we’re here to help! At Dimov CPA, our experienced team can guide you through the complexities of cryptocurrency taxation. Thus, you can understand the rates and implications of your transactions. Feel free to contact us for personalized assistance tailored to your needs!