How To Cash Out Crypto Without Paying Taxes in 2026 (Legally)

Key Takeaways on How To Cash Out Crypto Without Paying Taxes

• In the majority of countries, it’s impossible to convert cryptocurrency to fiat money without facing tax obligations, since such transactions are considered taxable events.
• Obtaining loans secured by your crypto holdings enables you to gain access to funds without disposing of your assets or facing capital gains taxation.
• Offsetting losses, maintaining appropriate holding durations, and planning withdrawal timing can drastically minimize your tax obligations.
• Leveraging your crypto as collateral maintains your investment position while delivering instant access to funds for any needs.

How To Cash Out Cryptocurrency Without Paying Taxes?

To begin with, there’s no legal method to convert cryptocurrency into cash without incurring taxes in nations such as the United States, United Kingdom, or Australia. Converting crypto into traditional currency creates a taxable transaction subject to capital gains taxation. Nevertheless, multiple lawful approaches exist that allow you to tap into your crypto’s value without actually selling it.

Hold Your Crypto Long-Term

Within the United States, maintaining cryptocurrency ownership for more than twelve months makes you eligible for long-term capital gains rates, which are considerably more favorable than short-term rates that align with regular income tax levels (reaching up to 37%). While this doesn’t completely remove tax liability, it meaningfully decreases it.

Use Tax-Loss Harvesting

The practice of tax-loss harvesting means disposing of cryptocurrency holdings that have decreased in value to counterbalance profits from other investments. When you possess both profitable and unprofitable positions, tactically selling the ones showing losses can lower your total tax responsibility.

The IRS permits you to subtract up to $3,000 in capital losses from your regular income each year, with any excess losses being transferred to subsequent years.

Gift Crypto to Family Members

Annual gifts of up to $18,000 per person (2024 threshold) can be given without incurring gift tax obligations. When the person receiving the gift falls into a lower income bracket, they may sell the cryptocurrency and face taxes at their reduced rate. This method is especially effective for dependent children or retired family members with limited earnings.

Donate Crypto to Charity

Contributing cryptocurrency that you’ve owned for more than a year to recognized charitable entities offers dual advantages: you circumvent capital gains taxation on the value increase and can take a tax write-off for the current market value. This essentially transforms taxable profits into deductible expenses.

Move to a Tax-Friendly Jurisdiction

Certain nations levy no capital gains taxation on cryptocurrency holdings: Portugal (for personal crypto holdings), Germany (following a one-year ownership period), Singapore, and various others. Moving abroad represents a significant decision requiring authentic residential establishment, not merely a brief visit overseas.

Take Out a Crypto-Backed Loan

Loans secured by cryptocurrency offer the most feasible tax-free option to cashing out. Services like CoinRabbit help you to get funds by pledging your cryptocurrency as collateral. Because crypto loans don’t count as taxable earnings, you gain access to funds without creating capital gains tax liabilities.

With these platforms, you can pledge crypto holdings (Bitcoin, Ethereum, and other accepted currencies) and obtain a loan in stablecoins or traditional money. Interest charges begin at 12-15% APR, and you keep ownership of your cryptocurrency, gaining from potential value increases.

This method proves particularly effective when you anticipate your cryptocurrency will grow in value. You obtain necessary capital while preserving your investment stake, settling the loan at your convenience.

How Much Taxes Do You Pay When You Cash Out Crypto?

Tax responsibilities differ substantially depending on how long you’ve held assets, your earnings level, and the nature of transactions in the United States.

Short-Term Capital Gains

Disposing of cryptocurrency owned for twelve months or less creates short-term capital gains taxed as ordinary income at your applicable tax bracket. For the 2025 tax period (filings submitted in 2026), the federal income tax brackets are structured as follows:

• 10% for earnings up to $11,925 (individual filers).
• 12% for earnings $11,926-$48,475.
• 22% for earnings $48,476-$103,350.
• 24% for earnings $103,351-$197,300.
• 32% for earnings $197,301-$250,525.
• 35% for earnings $250,526-$626,350.
• 37% for earnings exceeding $626,350.

When you purchase Bitcoin at $30,000 and dispose of it six months afterward at $50,000, the $20,000 profit faces taxation at your standard income bracket – potentially 37% for top earners, resulting in $7,400 in tax liability.

Long-Term Capital Gains

Maintaining crypto ownership beyond one year makes you eligible for favorable long-term rates:

• 0% for taxable earnings up to $47,025 (individual) or $94,050 (joint filers).
• 15% for earnings $47,026-$518,900 (individual) or $94,051-$583,750 (joint).
• 20% for earnings surpassing these limits.

The identical $20,000 profit from Bitcoin maintained beyond one year leads to $3,000 tax liability (15% bracket) for most moderate-income earners – under half the short-term bracket.

Additional Taxes

Wealthy taxpayers encounter an extra 3.8% Net Investment Income Tax on capital profits when modified adjusted gross earnings surpass $200,000 (individual) or $250,000 (joint). This increases the top long-term capital gains bracket to 23.8%.

State Taxes

If you want to cash out crypto, consider your location, as terms and conditions vary from state to state. The majority of states levy supplementary capital gains taxation varying from 0% (Texas, Florida, Nevada) to 13.3% (California). Total federal and state brackets can surpass 50% for short-term profits in states with high taxation.

Tax Planning Tips When It’s Time to Cash Out Crypto

Thoughtful planning substantially decreases tax burdens when accessing cryptocurrency value.

Time Your Sales Strategically

Before you cash out crypto, consider the following: hold off until you’ve maintained crypto ownership for beyond one year to become eligible for long-term brackets. When you’re approaching the one-year threshold, postponing the transaction by several weeks can preserve thousands in tax payments.

Evaluate your yearly income variations. Should you anticipate reduced earnings next year (professional break, leave of absence, retirement), postponing cryptocurrency sales to that period results in lower tax brackets.

Harvest Losses Before Year-End

Examine your holdings in December. Dispose of assets showing poor performance to actualize losses that counterbalance profits from successful sales. You may instantly repurchase the identical cryptocurrency – the wash sale regulation preventing this approach for equities doesn’t presently extend to crypto, although this could be modified.

Spread Sales Across Tax Years

Planning to cash out crypto? Instead of disposing of $100,000 worth of crypto in a single year, contemplate selling $50,000 yearly across two years. This approach maintains you in reduced tax brackets and optimizes the advantage of progressive rate frameworks.

Utilize the 0% Capital Gains Bracket

Individual filers with taxable income under $48,350 face zero long-term capital gains taxation in 2025. Should your wages total $35,000, you could actualize up to $13,350 in cryptocurrency profits without tax liability following the standard deduction. Strategic earnings management renders this remarkably attainable.

Consider Crypto Loans for Temporary Needs

When you require capital for 6-12 months but anticipate having earnings later, loans secured by cryptocurrency offer transitional funding without creating tax liabilities. You prevent selling during market downturns and preserve your investment stance.

CoinRabbit’s crypto loans present specific benefits: 

• no credit evaluation,
• rapid approval (frequently within hours), 
• the option to settle early without fees. 

Interest expenses frequently prove more economical than the tax consequence from selling, particularly for short-term capital profits.

Track Your Cost Basis Carefully

Employ specific identification accounting to reduce gains. When you acquired Bitcoin at three separate prices ($20,000, $35,000, $50,000) and the present price stands at $60,000, disposing of the $50,000 portion creates the minimal taxable profit. Accurate documentation enables this approach.

Consult a Crypto Tax Professional

Tax regulations change continuously. The Infrastructure Investment and Jobs Act established new documentation requirements beginning in 2025. If you don’t know how to cash out crypto without paying taxes, consult a qualified specialist. A specialized tax advisor guarantees compliance while optimizing legitimate tax minimization approaches.

How to Get a CoinRabbit Crypto Loan Instead of Cashing Out (Step-by-Step)

CoinRabbit has processed billions in crypto loans since its 2020 launch and remains one of the best Bitcoin loan options for speed and simplicity. You can get funds in 10 minutes without credit checks, lengthy verification, or complex paperwork.

Step 1: Choose your collateral from 300+ supported cryptocurrencies

The platform accepts Bitcoin, Ethereum, USDT, BNB, and major altcoins. CoinRabbit follows a strict no-rehypothecation policy – your collateral sits in cold wallets with multisig protection.

Step 2: Select your loan-to-value ratio: 50%, 70%, or 90%

Higher ratios give you more borrowing power but leave less room before liquidation if your crypto drops in value.

Step 3: Pick your stablecoin

You can borrow in USDT, USDC, or other stablecoins depending on your needs.

Step 4: Verify your email address

Enter your email address and type in the verification code. Then click Confirm and deposit the collateral to the provided address. Once the transaction is confirmed on the blockchain, CoinRabbit transfers your crypto to secure cold storage.

Step 5: Receive your loan

Stablecoins arrive in your wallet within minutes. Interest rates starts from 15% annually, depending on your chosen plan. There are no hidden origination fees or early repayment penalties.

Step 6: Monitor loan health through the real-time interface

The dashboard shows your current LTV ratio and warns you before any problems arise. Support staff responds around the clock if you need help.

Step 7: Repay when ready

If Bitcoin price rises during your loan term, you can close early, repay principal plus accrued interest, and reclaim your appreciated collateral. No prepayment penalties apply.

CoinRabbit provides one of the most straightforward experiences on how to use crypto as collateral while maintaining ownership and avoiding tax-triggering sales.

Final Thoughts: How To Cash Out Crypto Without Paying Taxes

Truly tax-free crypto conversion does not exist in most countries – every sale triggers capital gains obligations. Crypto-backed loans offer the most practical alternative, delivering immediate liquidity without creating taxable events while you maintain ownership and exposure to future price appreciation. Strategic planning with holding periods, loss harvesting, and conversion timing can reduce your eventual tax burden, but borrowing against your crypto remains the only way to access capital today with zero tax liability.

Last Updated on February 23, 2026 by Dan Marsh