Crypto Tax Rates 2026: Federal Brackets and What You Owe
Quick Answer
The crypto tax rate 2026 depends on how long you held the asset and your total taxable income. Short-term crypto gains (held one year or less) are taxed at ordinary income rates ranging from 10% to 37%. Long-term crypto gains (held longer than one year) are taxed at preferential rates of 0%, 15%, or 20%. High earners may also owe an additional 3.8% Net Investment Income Tax on top of those rates.
How the IRS Taxes Cryptocurrency
The IRS treats cryptocurrency as property. That means every time you sell, trade, or spend crypto at a gain, you owe capital gains tax. The rate you pay depends on two things: your holding period and your taxable income.
There are two categories of capital gains:
- Short-term capital gains apply to crypto held for one year or less. These gains are added to your ordinary income and taxed at the same rates as your salary or wages.
- Long-term capital gains apply to crypto held for more than one year. These gains get their own, lower tax brackets.
If you earned crypto through mining, staking, or airdrops, that income is taxed as ordinary income regardless of how long you hold the tokens afterward. For a broader overview, see our complete guide to crypto taxes.
Short-Term Crypto Tax Rates (2025 Tax Year)
Short-term crypto capital gains are taxed at the same rates as your wages, freelance income, and other ordinary income. If you bought Bitcoin in March 2025 and sold it in November 2025, the gain falls into this category.
Here are the 2025 tax year federal income tax brackets (the return you file in 2026):
Single Filers
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 - $11,925 |
| 12% | $11,926 - $48,475 |
| 22% | $48,476 - $103,350 |
| 24% | $103,351 - $197,300 |
| 32% | $197,301 - $250,525 |
| 35% | $250,526 - $626,350 |
| 37% | Over $626,350 |
Married Filing Jointly (MFJ)
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 - $23,850 |
| 12% | $23,851 - $96,950 |
| 22% | $96,951 - $206,700 |
| 24% | $206,701 - $394,600 |
| 32% | $394,601 - $501,050 |
| 35% | $501,051 - $751,600 |
| 37% | Over $751,600 |
Head of Household (HoH)
| Tax Rate | Taxable Income Range |
|---|---|
| 10% | $0 - $17,000 |
| 12% | $17,001 - $64,850 |
| 22% | $64,851 - $103,350 |
| 24% | $103,351 - $197,300 |
| 32% | $197,301 - $250,500 |
| 35% | $250,501 - $626,350 |
| 37% | Over $626,350 |
Remember, these brackets are marginal. You don't pay 37% on all of your income just because your top dollar falls in that bracket. Each portion of income is taxed at its corresponding rate.
Example: You are a single filer with $80,000 in salary. You also have a $20,000 short-term crypto gain. Your total taxable income is $100,000. The crypto gain pushes the top portion of your income into the 22% bracket. The tax on that $20,000 gain is roughly $4,400 (22% of $20,000), not 22% of your entire income.
Long-Term Crypto Tax Rates (2025 Tax Year)
If you held your crypto for more than one year before selling, you qualify for long-term capital gains rates. These rates are significantly lower than ordinary income rates, which is why holding period matters so much for crypto investors.
Here are the 2025 tax year long-term capital gains brackets:
Single Filers
| Tax Rate | Taxable Income Range |
|---|---|
| 0% | $0 - $48,350 |
| 15% | $48,351 - $533,400 |
| 20% | Over $533,400 |
Married Filing Jointly (MFJ)
| Tax Rate | Taxable Income Range |
|---|---|
| 0% | $0 - $96,700 |
| 15% | $96,701 - $600,050 |
| 20% | Over $600,050 |
Head of Household (HoH)
| Tax Rate | Taxable Income Range |
|---|---|
| 0% | $0 - $64,750 |
| 15% | $64,751 - $566,700 |
| 20% | Over $566,700 |
The 0% bracket is a significant opportunity. If your total taxable income (including the crypto gain) stays under $48,350 as a single filer, you could owe zero federal tax on your long-term crypto gains.
Example: You are married filing jointly. Your combined W-2 income is $85,000 and you have a $10,000 long-term crypto gain. Your total taxable income is $95,000, which falls under the $96,700 threshold. Your federal tax on that $10,000 crypto gain is $0.
Example: Same couple, but your combined income is $150,000 with a $30,000 long-term gain. Total taxable income is $180,000. The entire gain falls in the 15% bracket, so you owe $4,500 on the crypto gain.
Net Investment Income Tax (3.8% NIIT)
High-income taxpayers face an additional layer: the Net Investment Income Tax. This is a 3.8% surtax on investment income, including crypto capital gains, that applies when your modified adjusted gross income (MAGI) exceeds certain thresholds.
The NIIT thresholds are:
| Filing Status | MAGI Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Head of Household | $200,000 |
The 3.8% applies to the lesser of your net investment income or the amount by which your MAGI exceeds the threshold. These thresholds have not been adjusted for inflation since the NIIT was introduced in 2013.
Example: You are a single filer with $180,000 in salary and a $50,000 long-term crypto gain. Your MAGI is $230,000, which exceeds the $200,000 threshold by $30,000. Your net investment income is $50,000. The NIIT applies to the lesser amount: $30,000. You owe $30,000 x 3.8% = $1,140 in NIIT, on top of the 15% long-term capital gains tax on the full $50,000 gain.
This means high earners can face an effective long-term cryptocurrency tax rate of 23.8% (20% + 3.8%) on crypto gains.
Ordinary Income Tax on Mining, Staking, and Airdrops
Not all crypto income is treated as capital gains. When you receive crypto rather than sell it, the IRS treats it as ordinary income. This applies to:
- Mining rewards - The fair market value of coins when you receive them is taxable income.
- Staking rewards - Tokens earned from staking are income at the moment of receipt. For more detail, see our guide on crypto staking taxes.
- Airdrops - Free tokens received via airdrop are income at fair market value on the date of receipt.
- Payment for goods or services - Crypto received as compensation is treated the same as a paycheck.
This income is taxed at your ordinary income tax rate (the short-term brackets listed above). When you later sell those tokens, any additional gain or loss from the point of receipt is a separate capital gains event.
Example: You earn 2 ETH from staking when ETH is worth $3,500. You report $7,000 as ordinary income. Six months later, you sell those 2 ETH when the price is $4,000. Your capital gain is $1,000 ($8,000 - $7,000), taxed as a short-term gain since you held for less than a year.
How Holding Period Affects Your Tax Rate
The difference between short-term and long-term crypto tax rates can be dramatic. Here is a side-by-side comparison for a single filer with $90,000 in other taxable income and a $25,000 crypto gain:
| Scenario | Tax Rate | Tax Owed on Gain |
|---|---|---|
| Held 6 months (short-term) | 22%-24% | ~$5,750 |
| Held 14 months (long-term) | 15% | $3,750 |
That is roughly $2,000 in savings just from holding the asset a few more months. This is why tax-aware investors plan their sells around the one-year mark.
The holding period starts the day after you acquire the asset. If you bought crypto on January 15, 2025, it becomes a long-term asset on January 16, 2026. The FIFO vs LIFO vs HIFO cost basis method you choose also affects which lots get sold first, which directly influences whether a given sale is short-term or long-term.
Tax Calculations at Different Income Levels
To show how the crypto capital gains tax rate works in practice, here are three scenarios for a single filer in the 2025 tax year.
Low Income: $35,000 Salary + $10,000 Long-Term Gain
Total taxable income: $45,000. This falls under the $48,350 long-term threshold.
- Long-term capital gains tax: $0
- Ordinary income tax on salary: approximately $3,918
Middle Income: $95,000 Salary + $15,000 Short-Term Gain
Total taxable income: $110,000. The $15,000 gain is taxed as ordinary income.
- Part of the gain ($8,350) falls in the 22% bracket: $1,837
- Remaining gain ($6,650) falls in the 24% bracket: $1,596
- Total tax on crypto gain: approximately $3,433
High Income: $550,000 Salary + $100,000 Long-Term Gain
Total taxable income: $650,000. The gain falls in the 20% long-term bracket, and the NIIT applies.
- Long-term capital gains tax: $100,000 x 20% = $20,000
- NIIT: $100,000 x 3.8% = $3,800 (MAGI well above $200,000 threshold)
- Total tax on crypto gain: $23,800 (effective rate of 23.8%)
State Taxes: An Additional Layer
Federal taxes are only part of the picture. Most states also tax crypto capital gains, and state tax rates vary widely.
- No state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not tax capital gains income.
- High-tax states: California taxes capital gains as ordinary income up to 13.3%. New York City residents can face a combined state and city rate above 12%.
- Flat-rate states: States like Colorado (4.4%), Illinois (4.95%), and North Carolina (4.5%) apply a flat rate to all income including crypto gains.
Your total crypto tax rate is the sum of your federal rate, any applicable NIIT, and your state tax rate. A high earner in California could face a combined rate above 37% on long-term crypto gains.
For a step-by-step walkthrough on reporting all of this, see our guide on how to file crypto taxes.
Strategies to Lower Your Crypto Tax Bill
There are a few legitimate ways to reduce what you owe:
- Hold for more than one year. This is the simplest strategy. Moving from short-term to long-term rates can cut your tax bill nearly in half.
- Harvest tax losses. If you have crypto positions that are down, selling them to realize losses can offset your gains. Unlike stocks, crypto is not subject to the wash sale rule for the 2025 tax year (though legislation is pending).
- Choose the right cost basis method. HIFO (Highest In, First Out) often results in the lowest taxable gain by selling your highest-cost lots first. Compare FIFO vs LIFO vs HIFO to find what works best for your portfolio.
- Use the 0% bracket. If your income is low enough, time your sales to keep total taxable income under the 0% long-term threshold.
- Donate appreciated crypto. Donating crypto held for more than one year to a qualified charity lets you deduct the full fair market value without paying capital gains tax.