Key Takeaways on Taxes on Crypto Gains
- Crypto is taxed as property; the gains are treated from sales, trades, and spending like stocks or real estate.
- Short-term gains are taxed as ordinary income (10-37%)
- Long-term gains range from 0% to 20%
- Taking a crypto loan on CoinRabbit helps managing taxes without selling your assets
What are Taxes on Crypto Gains?
Taxes on crypto gains are taxes you pay when making a profit from buying, selling, or using cryptocurrency. In most countries, crypto is treated like property or an investment asset, similar to stocks, which means that profits from it are subject to capital gains tax.
Rates depend on several factors:
- How long you held the crypto. There are short-term vs. long-term gains.
- The type of transaction. Selling for fiat, trading between cryptos, or using crypto for purchases.
- Your income level.
Taxes on Crypto Gains: Short-Term vs. Long-Term
Short-Term Gains
In case you have less than one year of holding crypto, the profit is taxed as ordinary income. It means that they will be taxed according to your normal income rates between 10% and 37% depending on your total rate of taxable income. For 2025, the rates are as follows:
| Tax Rate | Single | Married Filing Jointly | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 to $11,925 | $0 to $23,850 | $0 to $17,000 | $0 to $11,925 |
| 12% | $11,926 to $48,475 | $23,851 to $96,950 | $17,001 to $64,850 | $11,926 to $48,475 |
| 22% | $48,476 to $103,350 | $96,951 to $206,700 | $64,851 to $103,350 | $48,476 to $103,350 |
| 24% | $103,351 to $197,300 | $206,701 to $394,600 | $103,351 to $197,300 | $103,351 to $197,300 |
| 32% | $197,301 to $250,525 | $394,601 to $501,050 | $197,301 to $250,500 | $197,301 to $250,525 |
| 35% | $250,526 to $626,350 | $501,051 to $751,600 | $250,501 to $626,350 | $250,526 to $375,800 |
| 37% | $626,351 or more | $751,601 or more | $626,351 or more | $375,801 or more |
Source: irs.gov
Long-Term Gains
When your cryptocurrency is held over one year, capital gains tax is imposed on the profit on the sale or exchange. These are usually lower than the short term rates (from 0% to 20%) and are determined by your income. The 2025 long-term rates are:
| Tax Rate | Single | Married Filing Jointly | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 0% | $0 to $48,350 | $0 to $96,700 | $0 to $64,750 | $0 to $48,350 |
| 15% | $48,351 to $533,400 | $96,701 to $600,050 | $64,751 to $566,700 | $48,351 to $300,000 |
| 20% | $533,401 or more | $600,051 or more | $566,701 or more | $300,001 or more |
Source: irs.gov
Taxes on Crypto Gains: Taxable cases
Selling Cryptocurrency for Fiat
This is the most common case where your actions are subject to taxation. If you have gained profit on this transaction, then the difference between the amount you originally paid and the selling price is taxed as a capital gain. Depending on how long you held the crypto, you will either pay a short or a long-term taxes on crypto gains.
Trading Crypto for Another Crypto
When you trade one cryptocurrency with another (e.g. when you sell BTC and buy ETH), it is taxable as well. Although no fiat money is exchanged, you should report any gains or losses on the difference between the value of the cryptocurrencies when they were traded and what you paid per unit. The crypto tax rate depends on how long you held the assets before trading.
Using Crypto for Purchases
Have you ever wondered: Can you buy a house with Bitcoin? It is possible, but If you decide to sell crypto for this purpose, it has certain tax implications.
The purchase of goods or services using cryptocurrency is considered a disposal of the crypto by the IRS, and you are liable to capital gains tax. In case your crypto has gained value after you bought it, you will be taxed on that gain. As an example, when you are paid the services in 1 Bitcoin of value $100,000, that $100,000 is considered as income and you would pay tax according to your income tax bracket.
Receiving Crypto as Income
If you earn cryptocurrency as payment for services, whether from a job, freelance work, mining, or staking rewards, it is considered ordinary income and taxed at your regular income tax rate. The value of the crypto at the time you receive it is included in your gross income. For example, if you receive 1 Bitcoin worth $100,000 as payment for services, that entire amount is treated as income and taxed according to your regular income tax bracket.
Curious about crypto? Check our new articles on Zcash wallet and crypto exit strategies. Explore best Polkadot wallet and start applying your knowledge in practice.
Non-Taxable Crypto Activities
Buying and Holding Crypto
Simply purchasing cryptocurrency with fiat and holding it in your wallet does not trigger a taxable event. There is no tax till you sell, trade, or otherwise dispose the asset which then makes any realized gains or losses reportable. Holding crypto for a long term has been given a special name – HODL.
Transferring Between Your Own Wallets
Moving cryptocurrency from one wallet or account you control to another remains non-taxable. The IRS views this as an internal transfer, so your original cost basis and acquisition date carry over unchanged for future calculations.
Gifting Crypto
The maximum amount of cryptocurrency that you can gift to a recipient without being subject to a gift tax is 19,000 in 2025. Anything over this limit needs to be reported as a gift tax return but no tax is immediately due unless you exceed your lifetime exemption. The recipient inherits your cost basis for future gain calculations.
Donating to Qualified Charities
Contributing cryptocurrency directly to a 501(c)(3) organization allows you to claim a charitable deduction based on the asset’s fair market value if held longer than one year. This avoids capital gains tax entirely while providing a potential income tax benefit, assuming you itemize deductions.
Receiving Crypto as a Gift
When you receive cryptocurrency as a gift, no income tax applies at the time of receipt. You inherit the donor’s cost basis and holding period, meaning any future sale will trigger capital gains tax based on appreciation from the original purchase price.
How to Minimize Your Taxes on Crypto Gains
1. Borrow Against Crypto with Crypto Loans
This approach helps to not trigger taxes on capital gains and works in the following way: deposit your crypto and get stablecoins like USDT or USDC or other assets in just 10-15 minutes without any paperwork or credit history checks. After that, you can use borrowed capital to trade, swap crypto or cover life expenses. All while your original coins stay in a safe cold storage.
Why crypto loans stand out:
✅ 300+ Cryptocurrencies Accepted as Collateral
Use BTC, ETH, and many other altcoins and stablecoins without worrying about exchange-specific asset limitations.
✅ No Rehypothecation
Your collateral stays securely stored in cold wallets and is never loaned out or used for trading activities.
✅ Flexible Loan Term
Pick short or long-term loan options. Set your ideal LTV ratio and deposit crypto at a competitive rate.
✅ Fixed interest rate
You always know exactly what your rate will be. Liquidation happens only if the value of your collateral drops below the required safety margin. There are no hidden fees or fluctuating APRs.
✅ Full Ownership of Your Assets
Your assets remain fully yours. After the loan is repaid, you receive the entire collateral back, including any increase in its market price.
2. Hold Your Crypto for the Long Term
Keeping your assets longer than one year is one of the simplest methods to make less tax on your crypto capital gains. In this way, you are eligible to receive long-term capital gains rates, which are significantly lower than short-term rates. This strategy can significantly reduce your overall tax bill.
3. Tax-Loss Harvesting
In case your crypto investments have gone down, you can sell them to claim tax losses. This strategy allows you to offset any taxable gains with your losses, potentially lowering your overall tax liability. You can even use up to $3,000 in losses to offset ordinary income. Losses that exceed $3,000 can be carried forward to future years.
4. Use a Tax-Advantaged Account
Some investors prefer to keep their cryptocurrency in self-managed retirement plans, including IRA or 401(k). Such accounts provide either tax-deferred or tax-free growth, according to the type of account. While it’s not common, it is possible to invest in crypto through these accounts and defer your tax payment until you withdraw funds.
For market insights, read our articles about Gold vs Bitcoin as an inflation hedge or learn what is hedging in crypto trading.
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The information provided in this article is for educational and informational purposes only and should not be construed as financial advice. Cryptocurrency investments carry a high level of risk, and it is essential to conduct thorough research and consult with a qualified financial advisor before making any investment decisions. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any financial institution or organization. We do not take responsibility for the platforms we recommend. Always invest responsibly and consider your individual financial situation before making investment choices.
Last Updated on November 17, 2025 by Dan Marsh
