Invest in crypto? Here’s what to know about your 2025 taxes
As cryptocurrency grows in popularity, more people are jumping into the market. But with gains come taxes, and the rules for 2025 bring some important updates from the IRS. If you buy, sell, or hold digital assets like Bitcoin or Ethereum, understanding these basics can help you stay compliant and avoid surprises come tax time. This guide breaks down the key points in simple terms.
First, the IRS treats crypto as property, not currency. This means most actions with your crypto trigger a taxable event. For example, selling coins for cash, trading one crypto for another, or even using them to buy goods counts as a sale. You calculate the gain or loss by subtracting what you paid (your cost basis) from what you received (the fair market value at the time).
Gains fall into two categories: short-term and long-term. Short-term gains, from assets held less than a year, are taxed like regular income. Rates range from 10% to 37%, depending on your total income bracket. Long-term gains, for holdings over a year, get lower rates of 0% to 20%. Losses can offset gains, and up to $3,000 of extra losses can reduce your other income.
Other income sources include mining rewards, staking earnings, or airdrops—these are taxed as ordinary income at the time you receive them. If you’re a business miner, you might deduct expenses like equipment costs.
A big change for 2025 is new reporting. Platforms like exchanges must send you Form 1099-DA starting next year. This form shows the total value of your sales and trades, helping the IRS track activity. For now, there’s no penalty if you miss filing details on cost basis, but full info will be required by 2026. Keep good records: track dates, amounts, and values for every transaction.
To file, use Schedule D on your Form 1040. Tools like tax software can import wallet data to simplify things. If your trades are complex, consider a tax pro who knows crypto.
Staying on top of these rules ensures you pay what you owe without overpaying. As the market evolves, check IRS updates regularly. Smart planning now can make tax season smoother in 2026.
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