Crypto Tax Laws 2025: What’s Taxable & How to File
Updated October 2025
In 2025, the IRS continues to treat cryptocurrencies as property, not currency. That means every time you sell, swap, or spend crypto, it can create a taxable event. This guide breaks down what’s taxable, how to report it on Form 8949 and Schedule D, and the most common filing mistakes crypto traders and investors make.
If you’re new to digital assets, start with our Beginner’s Cryptocurrency Guide or dive deeper into Stablecoins Explained (2025) before tackling taxes.
Quick Snapshot: How the IRS Sees Crypto
- Crypto = Property: Not treated as currency; every sale, swap, or purchase is a potential taxable event.
- Disposals create gains/losses: Selling or swapping one asset for another triggers capital gains tax.
- Income from rewards is taxable: Staking, mining, or airdrops are ordinary income at fair market value.
- Form 1040 requires disclosure: The digital assets checkbox must be answered truthfully each year.
For official definitions, see the IRS Digital Asset FAQ.
What’s Taxable vs Not Taxable
The IRS separates activities that create taxable income from those that don’t. Here’s how common scenarios apply in 2025:
| Action | Taxable? | Type | Notes |
|---|---|---|---|
| Buy crypto with USD & hold | No | n/a | Track cost basis for future sales. |
| Sell crypto for USD | Yes | Capital gain/loss | Use Form 8949 and Schedule D. |
| Swap one coin for another | Yes | Capital gain/loss | Even without touching fiat. |
| Spend crypto on goods/services | Yes | Capital gain/loss | Proceeds equal fair market value. |
| Receive staking/mining rewards | Yes | Ordinary income | Taxed when you control the coins. |
| Wallet transfers (self-to-self) | No | n/a | Keep transaction proof for audits. |
Learn how to export your transactions for Form 8949 to simplify the process.
Staking, Mining & Airdrops
Staking and mining are considered income once you can access the rewards. You’ll later owe capital gains when selling them. For example, if you earn 2 SOL from staking and sell them six months later at a higher price, you’ll owe both ordinary income and capital gains tax.
- Mining: Treated as self-employment if done commercially.
- Staking: Income recognized at claim or control date.
- Airdrops: Taxable when under your control.
See also Staking Taxes Explained (2025) for advanced examples of basis tracking.
Capital Gains & Cost Basis
Capital gains equal your selling price minus cost basis (purchase price + fees). Holding period determines the rate:
- Short-term: Held under one year → taxed at ordinary income rates.
- Long-term: Held over a year → taxed at reduced rates.
Crypto still isn’t covered under wash-sale rules, though proposals may change this. Track losses accurately for tax-loss harvesting. For NFT cases, see NFT Taxes 101 (2025).
How to File Crypto Taxes (Step-by-Step)
- Collect CSVs from every wallet and exchange.
- Convert all values to USD at transaction time.
- Calculate gains/losses consistently (FIFO, specific ID).
- List disposals on Form 8949 and summarize in Schedule D.
- Report staking/mining income under ordinary income.
Tools like crypto tax software help automate reporting and integrate with IRS forms.
Record-Keeping Checklist
- Exchange CSVs and DeFi logs
- USD values for every taxable event
- Wallet addresses under your control
- Proof of transfers (TX hashes)
- Document cost basis method
For power users, automation can save days of manual work at tax time.
DeFi & NFTs: Gray Areas Simplified
DeFi introduces complex tax events through liquidity pools, swaps, and yield farming. Each token swap is a taxable disposal. LP rewards count as income. NFTs bought with crypto also trigger gains/losses on the spent tokens.
For creators, NFT royalties are ordinary income; secondary sales are capital gains. Always document every TX hash.
State Taxes & Optimization
States differ on crypto taxation:
- No income tax states: Florida, Texas, Wyoming—only federal applies.
- Offset gains with losses: You can deduct up to $3,000 in net capital losses per year.
- Charitable giving: Donating appreciated crypto can reduce total liability.
Explore optimization through long-term holding and direct charitable donations.
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FAQ
Do I pay tax when transferring crypto between wallets?
No. Moving coins between wallets you own isn’t taxable, but keep records of ownership.
Are stablecoins taxable?
Buying or holding isn’t taxable, but selling, spending, or swapping can trigger small gains/losses.
What if I earned staking rewards and reinvested them?
You owe income tax when received; reinvestment doesn’t change that initial liability.
How long should I keep records?
At least seven years after filing, especially for high-value trades or NFT sales.
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