Introduction
Reporting cryptocurrency taxes can be more complex than expected, and many investors don’t realize the tax obligations they are creating with their crypto transactions. The IRS has been tightening its focus on cryptocurrency taxation for years, and new rules in 2025 will bring even stricter oversight.
If you’re unsure how to report crypto on your taxes, this guide will provide a clear breakdown of the IRS rules, tax rates, and reporting requirements to help you stay compliant.
Do I Need to Report Crypto on My Taxes?
Yes. The IRS considers crypto assets like Bitcoin and Ethereum as property, meaning that almost every transaction can trigger a tax event. Even if you lost money, you are required to report your crypto transactions on your tax return.
Important Changes to Crypto Tax Rules in 2025
Starting January 1, 2025, the IRS is implementing major changes to cryptocurrency tax reporting:
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Form 1099-DA – All U.S. crypto exchanges will be required to report users’ transactions on a new tax form called 1099-DA.
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Wallet-by-Wallet Accounting – Investors must track their cost basis separately for each wallet, making tax reporting more complicated.
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Increased IRS Oversight – The IRS is actively cracking down on crypto tax non-compliance. Investors who fail to report correctly risk audits and penalties.
Now is the time to catch up on prior-year crypto taxes to avoid potential issues with the IRS in 2025 and beyond.
How Is Crypto Taxed?
The IRS taxes cryptocurrency similarly to stocks and other property, meaning there are two main types of crypto taxes:
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Capital Gains Tax – When you sell, trade, or dispose of crypto for a profit.
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Income Tax – When you earn cryptocurrency through staking, mining, airdrops, or as payment for services.
This applies to all crypto assets, including Bitcoin, altcoins, stablecoins, NFTs, and DeFi tokens.
Crypto Capital Gains Tax
When you sell or trade crypto for more than your purchase price, you incur a capital gain. The tax rate depends on how long you held the asset:
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Short-Term Capital Gains – If you held the crypto for 1 year or less, the gain is taxed at your ordinary income tax rate (10% - 37%).
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Long-Term Capital Gains – If you held the crypto for more than 1 year, the gain is taxed at 0%, 15%, or 20%, depending on your total income.
Formula for calculating capital gains:
Sales Proceeds – Cost Basis = Capital Gain/Loss
Every crypto sale or trade must be individually calculated and reported on Form 8949.
Crypto Income Tax
Crypto income tax applies when you receive cryptocurrency through:
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Mining
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Staking
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Airdrops
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Yield farming rewards
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Getting paid in crypto
These activities are taxed as ordinary income based on the fair market value of the crypto at the time of receipt.
For example, if you earn 0.5 ETH from staking while ETH is worth $1,000, you will report $500 of taxable income.
Crypto Tax Rates for 2025
Short-Term Capital Gains & Income Tax Rates
|
Tax Rate |
Single |
Married Filing Jointly |
Married Filing Separately |
Head of Household |
|
10% |
$0 – $11,600 |
$0 – $23,200 |
$0 – $11,600 |
$0 – $16,550 |
|
12% |
$11,601 – $47,150 |
$23,201 – $94,300 |
$11,601 – $47,150 |
$16,551 – $63,100 |
|
22% |
$47,151 – $100,525 |
$94,301 – $201,050 |
$47,151 – $100,525 |
$63,101 – $100,500 |
|
24% |
$100,526 – $191,950 |
$201,051 – $383,900 |
$100,526 – $191,950 |
$100,501 – $191,950 |
|
32% |
$191,951 – $243,725 |
$383,901 – $487,450 |
$191,951 – $243,725 |
$191,951 – $243,700 |
|
35% |
$243,726 – $609,350 |
$487,451 – $731,200 |
$243,726 – $365,600 |
$243,701 – $609,350 |
|
37% |
$609,351 or more |
$731,201 or more |
$365,601 or more |
$609,351 or more |
Long-Term Capital Gains Tax Rates
|
Tax Rate |
Single |
Married Filing Jointly |
Married Filing Separately |
Head of Household |
|
0% |
$0 – $47,025 |
$0 – $94,050 |
$0 – $47,025 |
$0 – $63,000 |
|
15% |
$47,026 – $518,900 |
$94,051 – $583,750 |
$47,026 – $291,850 |
$63,001 – $551,350 |
|
20% |
$518,901 or more |
$583,751 or more |
$291,851 or more |
$551,351 or more |
Which Crypto Transactions Are Taxable?
The IRS considers the following crypto transactions taxable:
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Selling crypto for fiat (USD, EUR, etc.)
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Trading one cryptocurrency for another
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Using crypto to pay for goods or services
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Earning crypto through mining, staking, or yield farming
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Receiving an airdrop or getting paid in crypto
Non-Taxable Crypto Transactions
The following crypto transactions are not taxable:
-
Buying crypto with fiat currency (USD, EUR, etc.)
-
Holding crypto without selling it
-
Transferring crypto between personal wallets
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Gifting crypto (within tax-free limits)
-
Donating crypto to a qualified nonprofit
How to Report Crypto on Your Taxes
To report your crypto taxes, follow these steps:
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Gather Your Crypto Transaction Records
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Download your full transaction history from every exchange, wallet, or DeFi platform you used.
-
-
Calculate Capital Gains and Losses
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Use Form 8949 to report each individual taxable event.
-
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Report Crypto Income
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List mining, staking, or other earned crypto as ordinary income on Schedule C (business income) or Schedule 1 (miscellaneous income).
-
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Transfer Totals to Schedule D
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Summarize your capital gains/losses from Form 8949 on Schedule D.
-
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Consider Professional Assistance
-
Crypto tax laws are complex. A tax professional can ensure compliance and maximize tax-saving opportunities.
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Conclusion
As crypto tax regulations become stricter in 2025, it is more important than ever to accurately track and report crypto transactions. With increased IRS oversight and new reporting requirements, failing to comply could result in penalties or audits.
At Block3 Finance, we specialize in crypto tax planning and reporting, helping investors stay compliant while minimizing their tax liability. Contact us today for expert guidance on your crypto taxes.
If you have any questions or require further assistance, our team at Block3 Finance can help you.
Please contact us by email at inquiry@block3finance.com or by phone at 1-877-804-1888 to schedule a FREE initial consultation appointment.
You may also visit our website (www.block3finance.com) to learn more about the range of crypto services we offer to startups, DAOs, and established businesses.