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How to file crypto taxes in the US (2024–2025 tax season)

Key takeaways

  • US crypto investors must file their 2024 tax returns by April 15, 2025, ensuring all crypto transactions are accurately reported to the IRS.

  • Crypto held for less than a year is taxed as ordinary income (10%-37%), while holdings over a year qualify for lower capital gains rates (0%, 15%, or 20%).

  • Selling, trading, or spending crypto triggers taxes, while holding or transferring between wallets does not.

  • Mining, staking, airdrops, and crypto payments are taxed as income at applicable rates.

The world of cryptocurrencies can indeed be an exciting space for investors, but as the tax season approaches, many US investors find themselves grappling with confusion and uncertainty. 

With the upcoming tax filing deadline of April 15, 2025, it’s a critical time to get a handle on crypto tax obligations. Ask most US crypto investors, and they’ll likely tell you that figuring out what transactions trigger a taxable event feels like navigating a maze.

Understanding various aspects of tax filing is crucial for accurately filing taxes, avoiding penalties and staying compliant with the Internal Revenue Service (IRS). This article breaks down key elements like tax brackets, rates, exemptions and other critical details. 

How does the IRS tax crypto?

The Internal Revenue Service, the agency responsible for collecting US federal taxes, treats cryptocurrencies as property for tax purposes. You pay taxes on gains realized when selling, trading or disposing of cryptocurrencies. For short-term capital gains (held less than a year), you pay taxes at the rates of 10%–37%, depending on your income bracket. 

Long-term capital gains (assets held for over a year) benefit from reduced rates of 0%, 15% or 20%, also based on your taxable income.

When you dispose of cryptocurrency for more than its purchase price, you generate a capital gain. Conversely, selling below the purchase price results in a capital loss. You must report both your capital gains and losses for the year in which the transaction occurs, with gains being taxable and losses potentially offsetting gains to reduce your tax liability. 

With the upcoming April 15, 2025, deadline for filing 2024 tax returns, US crypto investors need to ensure these transactions are accurately tracked and reported.

To illustrate, suppose you purchased Ether (ETH) worth $1,000 in 2023 and sold it after a year in 2024 for $1,200, netting a $200 profit. The IRS would tax that $200 as a long-term capital gain, applying the appropriate rate based on your 2024 income.

Taxes are categorized as capital gains tax or income tax, depending on the type of transactions:

  • Capital gains tax: Applies to selling crypto, using crypto to purchase goods or services, or trading one cryptocurrency for another.

  • Income tax: Applies to crypto earned through mining, staking, receiving it as payment for work, or referral bonuses from exchanges.

These distinctions are crucial for accurate reporting by the April 15 deadline. Gains are taxed, while losses can help offset taxable income, so detailed record-keeping is a must.

Did you know? In Australia, gifting cryptocurrency triggers a capital gains tax (CGT) event. The giver may need to report gains or losses based on the asset’s market value at the time of transfer, though certain gifts — like those between spouses — may qualify for exemptions. While this differs from US rules, it highlights how crypto taxation varies globally.

How crypto tax rates work in the US

In the US, your crypto tax rate depends on your income and how long you’ve held the cryptocurrency. Long-term capital gains tax rates range from 0% to 20%, and short-term rates align with ordinary income tax rates of 10%–37%. Transferring crypto between your own wallets or selling it at a loss doesn’t trigger a tax liability.

You only owe taxes when you sell your crypto, whether for cash or for any other cryptocurrency. Consider this example: Suppose you bought crypto for $1,000 in 2024, and by 2025, its value rose to $2,000. If you don’t sell, no tax is due — unrealized gains aren’t taxable.

If you sell cryptocurrency after holding it for a year or less, your profits are subject to short-term capital gains tax. These gains are taxed as ordinary income, meaning they are added to your total taxable earnings for the year. 

Tax rates are progressive, based on income brackets, so different portions of your income are taxed at different rates. For instance, a single filer in 2025 pays 10% on the first $11,000 of taxable income and 12% on income up to $44,725. Short-term rates are higher than long-term rates, so timing your sales can significantly impact your tax bill.

Understanding crypto capital gains tax in the US

If you sell cryptocurrency after holding it for a year or less, your profits are subject to short-term capital gains tax. These gains are treated as ordinary income and added to your total taxable earnings for the year. Since tax rates are based on income brackets, different portions of your earnings are taxed at different rates, as explained above. 

2024–2025 federal income tax brackets for crypto earnings

Here are the federal income tax rates for the 2024–2025 tax year. You apply the 2024 tax brackets to income earned in the 2024 calendar year, reported on tax returns filed in 2025.

Federal income tax rates for 2024 tax year

Long-term capital gains tax for crypto earned in 2024

You pay long-term capital gains tax if you sell cryptocurrency after holding it for more than a year. Unlike short-term gains, these aren’t taxed as ordinary income. Instead, tax rates are based on your total taxable income and filing status. Long-term capital gains tax rates are 0%, 15% or 20%, making them lower than short-term rates. Holding crypto longer can reduce your tax burden significantly.

Here is a table outlining long-term crypto capital gains tax for the calendar year 2024. These rates are applicable when filing tax returns in 2025.

Long-term capital gains tax 2024

2024–2025 standard deduction: Reduce your crypto taxable income

The standard deduction is the portion of your income that’s exempt from federal taxes before tax rates are applied, reducing your taxable income.

Here is a table regarding tax deductions in the calendar year 2024. These amounts are applicable when filing for tax returns in 2025.

2024-2025 standard deduction for crypto taxes

How are crypto airdrops taxed in the US?

In the US, crypto airdrops are treated as ordinary income by the IRS and taxed at the time they come under the taxpayer’s full control. The taxable amount is based on the tokens’ fair market value at that moment, even if the taxpayer didn’t request them. Later, selling or trading those tokens may trigger capital gains tax, depending on the price difference between receipt and disposal.

The taxable event hinges on control: If tokens automatically appear in a taxpayer’s wallet, the income is typically recognized upon arrival. If the tokens require manual claiming (e.g., through a transaction), the taxable event occurs when the claim is completed. Either way, the fair market value at that point determines the income reported.

When the taxpayer sells or trades the airdropped tokens, they incur a capital gain or loss, calculated as the difference between the value at receipt (the basis) and the value at sale or trade. Moreover, the holding periods matter: If sold within a year, gains are taxed at ordinary income rates (10%–37%, based on income brackets). If held longer than a year, gains qualify for lower long-term capital gains rates (0%, 15% or 20%, depending on income). Proper tracking of receipt dates and values is essential for accurate tax reporting.

Crypto gifting rules and tax implications in the US

In the US, gifting cryptocurrency is generally not a taxable event for either the giver or the recipient, meaning no immediate tax is owed. However, specific thresholds and reporting requirements must be followed to stay compliant with IRS rules. 

For the 2024 tax year (filed by April 15, 2025), if the total value of crypto gifts to a single recipient exceeds $18,000, the giver must file a gift tax return using Form 709. 

When the recipient eventually sells the gifted cryptocurrency, they’ll calculate capital gains or losses based on the giver’s original cost basis — the price the giver paid for the crypto. If this cost basis isn’t documented or available, the recipient may need to assume a basis of $0, which could increase their taxable gain upon sale. To avoid complications, both parties should keep detailed records of the gift’s fair market value at the time of transfer and the giver’s original cost basis.

Did you know? In the UK, giving cryptocurrency as a gift may result in capital gains tax for the giver, except for gifts to spouses or civil partners. Additionally, inheritance tax could apply if the giver dies within seven years of the gift.

Essential forms for filing crypto taxes in 2024

With the April 15, 2025, deadline nearing, here are the key forms for reporting 2024 crypto transactions:

  • Form 8949: For reporting capital gains and losses from crypto sales, trades and disposals. Each transaction must be listed individually.

  • Schedule D (Form 1040): Summarizes total capital gains and losses from Form 8949; used for calculating taxable income.

  • Schedule 1 (Form 1040): Reports additional income, including staking rewards, airdrops and hard forks, if classified as taxable income.

  • Schedule C (Form 1040): Used by self-employed individuals or businesses to report crypto-related income from mining, consulting or freelance work.

  • Form 1099-MISC: Issued for staking, mining or payment income over $600

  • Form 1040: The main return form to combine income, deductions and tax liability.

  • FBAR (FinCEN Form 114): File separately if foreign crypto accounts exceeded $10,000 in 2024.

Form 8949

Step-by-step guide to filing crypto taxes for the 2024–2025 tax season

Here’s how to file, step by step, leveraging the detailed tax rates and forms outlined above.

Step 1: Gather all crypto transaction records

Collect records for every 2024 crypto transaction:

  • Dates of buying, selling, trading or receiving crypto

  • Amounts (e.g., 0.5 Bitcoin) and US dollar fair market value (FMV) at the time

  • Cost basis (what you paid, including fees) and proceeds (what you received).

To ensure complete records, pull data from wallets, exchanges (e.g., Coinbase) and blockchain explorers. Export transaction histories or CSVs, and note staking rewards, airdrops or mining income separately with their FMV on receipt.

Step 2: Identify taxable events

Pinpoint which 2024 actions trigger taxes:

  • Taxable: Selling crypto for cash/stablecoins, trading crypto, spending crypto or earning it (mining, staking, airdrops).

  • Non-taxable: Buying and holding with USD, moving crypto between your wallets, gifting up to $18,000 per recipient.

Classify each taxable event as short-term (≤1 year) or long-term (>1 year) for rate purposes.

Step 3: Calculate capital gains and losses

For taxable sales or trades:

  • Formula: Proceeds (FMV at disposal) – Cost Basis = Gain/Loss

  • Example: Bought 1 Ether (ETH) for $2,000 in May 2024, sold for $2,500 in November 2024 = $500 short-term gain.

Use first-in, first-out or specific identification for cost basis (be consistent). Sum your net gains/losses. See the “2024 Federal Income Tax Brackets” section for how these are taxed.

Step 4: Calculate crypto income

For earnings (mining, staking, airdrops):

  • Record FMV in USD when received (e.g., 10 Cardano worth $5 on June 1, 2024 = $5 income).

  • Add to your other 2024 income to set your tax bracket, detailed in the sections above.

Step 5: Apply the 2024 standard deduction

Lower your taxable income with the standard deduction:

  • Single: $14,600

  • Married filing jointly: $29,200

  • Head of household: $21,900

Subtract this from total income (including short-term gains and crypto income). Long-term gains are taxed separately.

Step 6: Determine your tax rates

Apply rates to your gains and income (refer to “How Crypto Tax Rates Work in 2024”):

  • Short-term gains and income: Ordinary rates (10%–37%).

  • Long-term gains: 0%, 15% or 20%, based on income.

  • Offset gains with losses (up to $3,000 net loss against other income; carry forward excess).

Step 7: Complete the necessary tax forms

Fill out the required IRS forms (see “Essential Forms for Filing Crypto Taxes in 2024”):

  • List capital gains/losses and income on Form 8949, Schedule D and Schedule 1 as applicable.

  • Use Schedule C if self-employed (e.g., mining business).

  • Combine everything on Form 1040.

  • Check Form 1099-MISC if received and file FBAR for foreign accounts over $10,000.

Step 8: File your return by April 15, 2025

  • Submit via IRS e-file or mail, postmarked by April 15, 2025. 

  • Need more time? File Form 4868 for an extension to Oct. 15, 2025, but pay estimated taxes by April 15 to avoid penalties.

Step 9: Pay any taxes owed

Estimate your tax from Step 6, then pay via IRS Direct Pay or check. Late payments after April 15 incur a 0.5% monthly penalty plus interest.

Step 10: Keep records for audits

Store transaction records and forms for three to six years. The IRS is intensifying crypto scrutiny — be prepared.

Did you know? In Canada, giving cryptocurrency as a gift is generally considered a taxable disposition, requiring the giver to determine and report any capital gains or losses.

Important dates and deadlines for 2024–2025 tax season and beyond 

Here are important dates regarding the 2024–2025 tax season and 2025 transition:

2024 tax season

  • Jan. 31, 2025: Some exchanges may issue voluntary 1099s (e.g., 1099-MISC).

  • April 15, 2025: File taxes on crypto earned in 2024.

2025 transition

  • Jan. 1, 2025: Form 1099-DA reporting begins.

  • Dec. 31, 2025: Safe harbor ends for adjusting universal cost basis.

  • Jan. 31, 2026: Receive Form 1099-DA for 2025 trades.

Quarterly estimates

  • June 15, Sept. 15, 2025, etc., for active traders.

New IRS crypto tax rules for 2025: What you need to know

The IRS introduced new rules for tax filing and reporting aimed at US cryptocurrency taxpayers, but these regulations have encountered significant pushback. Both the US Senate and House of Representatives voted to repeal them under the Congressional Review Act (CRA), and President Donald Trump has signaled support for the rollback. Despite this uncertainty, understanding these rules remains crucial, especially with deadlines looming in 2025.

A core component of the new rules is calculating taxes using a cost basis — the original amount invested in an asset, including fees or commissions. Accurately tracking cost basis is vital for proper tax reporting and prevents double taxation on reinvested earnings. It’s the starting point for determining capital gains or losses. 

Under the updated IRS guidelines, crypto investors must now track the cost basis (original purchase price) separately for each account or wallet, moving away from a universal tracking approach. This requires recording the purchase date, acquisition cost and specific transaction details.

The rules also mandate specific identification for every digital asset sale, requiring taxpayers to report the exact purchase date, quantity and cost of the assets sold. If this information isn’t provided, the IRS defaults to the first-in, first-out (FIFO) method — selling your earliest coins first — which could inflate taxable gains if those initial purchases had lower costs. 

For taxpayers previously using a universal cost basis method, the IRS requires reallocating their basis across all accounts or wallets accurately by Dec. 31, 2025, to comply with these standards.

Form 1099-DA: What to expect for crypto taxes in 2025–2026

As of March 27, 2025, Form 1099-DA is set to become a pivotal tool for the 2025–2026 tax season, simplifying how cryptocurrency transactions are reported in the US. This new form, tailored specifically for digital assets, will be issued by exchanges to both taxpayers and the IRS, providing a detailed breakdown of activities like sales, trades and other taxable crypto events from 2025. 

It’s designed to streamline compliance and bolster IRS oversight, reflecting the agency’s growing focus on tracking digital asset income. For taxpayers, it promises easier, more accurate reporting, while exchanges take on a larger role in tax documentation. 

For the 2024 tax year — due by April 15, 2025 — this form isn’t yet available; filers must still rely on existing forms like Form 1099-MISC until Form 1099-DA officially takes effect for 2025 earnings.

IRS crypto tax penalties: What happens if you don’t report or under-report in 2024?

US taxpayers who fail to meet their tax obligations may face penalties from the IRS. When tax obligations go unmet, the IRS sends a notice or letter detailing the penalty, its reason (e.g., late filing, non-payment or inaccurate reporting) and your next steps. 

Penalties vary: 

  • Late filing or non-payment can incur fines up to 25% of the unpaid tax, plus interest that accrues until settled. 

  • Other triggers — like bounced checks or fraudulent claims — add further costs, and the IRS may launch an audit to scrutinize your filings.

  • Individuals may face penalties of up to $100,000 and criminal sanctions, including imprisonment for up to five years. 

  • Corporations can be fined up to $500,000.

These stakes are high, especially as the IRS ramps up crypto enforcement in 2024. To dodge these consequences, double-check any notice for accuracy and act fast: Request a filing extension with Form 4868 if needed (due by April 15, 2025), arrange a payment plan for unaffordable penalties, or dispute the penalty if you believe it’s unjustified. Prompt action can save you from escalating costs and legal headaches.

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Sir Keir Starmer says US-UK trade talks ‘well advanced’ and rejects ‘knee-jerk’ response to Donald Trump tariffs

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Sir Keir Starmer says US-UK trade talks 'well advanced' and rejects 'knee-jerk' response to Donald Trump tariffs

Sir Keir Starmer has said US-UK trade talks are “well advanced” ahead of tariffs expected to be imposed by Donald Trump on the UK this week – but rejected a “knee-jerk” response.

Speaking to Sky News political editor Beth Rigby, the prime minister said the UK is “working hard on an economic deal” with the US and said “rapid progress” has been made on it ahead of tariffs expected to be imposed on Wednesday.

But, he admitted: “Look, the likelihood is there will be tariffs. Nobody welcomes that, nobody wants a trade war.

“But I have to act in the national interest and that means all options have to remain on the table.”

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Sir Keir added: “We are discussing economic deals. We’re well advanced.

“These would normally take months or years, and in a matter of weeks, we’ve got well advanced in those discussions, so I think that a calm approach, a collected approach, not a knee-jerk approach, is what’s needed in the best interests of our country.”

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Keir Starmer

Downing Street said on Monday the UK is expecting to be hit by new US tariffs on Wednesday – branded “liberation day” by the US president – as a deal to exempt British goods would not be reached in time.

A 25% levy on car and car parts had already been announced but the new tariffs are expected to cover all exports to the US.

Jonathan Reynolds, the business and trade secretary, earlier told Sky News he is “hopeful” the tariffs can be reversed soon.

But he warned: “The longer we don’t have a potential resolution, the more we will have to consider our own position in relation to [tariffs], precluding retaliatory tariffs.”

He added the government was taking a “calm-headed” approach in the hope a deal can be agreed but said it is only “reasonable” retaliatory tariffs are an option, echoing Sir Keir’s sentiments over the weekend.

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Donald Trump speaks to reporters aboard Air Force One. Pic: Reuters
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Donald Trump speaks to reporters aboard Air Force One on Sunday. Pic: Reuters

Tariff announcement on Wednesday

Mr Trump has been threatening tariffs – import taxes – on countries with the biggest trade imbalances with the US.

However, over the weekend, he suggested the tariffs would hit all countries, but did not name them or reveal which industries would be targeted.

Read more: How Trump’s tariffs could affect the UK

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‘Everything on table over US tariffs’

Mr Trump will unveil his tariff plan on Wednesday afternoon at the first Rose Garden news conference of his second term, the White House press secretary said.

“Wednesday, it will be Liberation Day in America, as President Trump has so proudly dubbed it,” Karoline Leavitt said.

“The president will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decades. He’s doing this in the best interest of the American worker.”

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Trump’s tariffs: What can we expect?

Tariffs would cut UK economy by 1%

UK government forecaster the Office for Budget Responsibility (OBR) said a 20 percentage point increase in tariffs on UK goods and services would cut the size of the British economy by 1% and force tax rises this autumn.

Global markets remained flat or down on Monday in anticipation of the tariffs, with the FTSE 100 stock exchange trading about 1.3% lower on Monday, closing with a 0.9% loss.

On Wall Street, the S&P 500 rose 0.6% after a volatile day which saw it down as much as 1.7% in the morning.

However, the FTSE 100 is expected to open about 0.4% higher on Tuesday, while Asian markets also steadied, with Tokyo’s Nikkei 225 broadly unchanged after a 4% slump yesterday.

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Blockchain Association CEO will move to Solana advocacy group

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Blockchain Association CEO will move to Solana advocacy group

Blockchain Association CEO will move to Solana advocacy group

Kristin Smith, CEO of the US-based Blockchain Association, will be leaving the cryptocurrency advocacy group for the recently launched Solana Policy Institute.

In an April 1 notice, the Blockchain Association (BA) said Smith would be stepping down from her role as CEO on May 16. According to the association, the soon-to-be former CEO will become president of the Solana Policy Institute on May 19.

The association’s notice did not provide an apparent reason for the move to the Solana advocacy organization nor say who would lead the group after Smith’s departure. Cointelegraph reached out to the Blockchain Association for comment but did not receive a response at the time of publication.

Cryptocurrencies, United States, Solana, Policy

Blockchain Association CEO Kristin Smith’s April 1 announcement. Source: LinkedIn

Smith, who has worked at the BA since 2018 and was deputy chief of staff for former Montana Representative Denny Rehberg, will follow DeFi Education Fund CEO Miller Whitehouse-Levine, leaving his position to join the Solana Policy Institute as CEO. According to Whitehouse-Levine, the organization plans to educate US policymakers on Solana.

Related: Congress on track for stablecoin, market structure bills by August: Blockchain Association

With members from the crypto industry, including Coinbase, Ripple Labs, and Chainlink Labs, the BA has filed a lawsuit against the US Internal Revenue Service, challenging regulations requiring brokers to report crypto transactions. The group often criticized the US Securities and Exchange Commission under former chair Gary Gensler for its “regulation by enforcement” approach to crypto, resulting in steep legal fees for many companies.

Less than 48 hours after the Solana Policy Institute’s launch, it’s unclear what the group’s immediate goals may be for engaging with US lawmakers and advocating for the industry. The organization described itself as a non-partisan nonprofit group.

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Payouts for departing civil servants capped at £95,000 under voluntary exit scheme

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Payouts for departing civil servants capped at £95,000 under voluntary exit scheme

The most senior and long-serving civil servants could be offered a maximum of £95,000 to quit their jobs as part of a government efficiency drive.

Sky News reported last week that several government departments had started voluntary exit schemes for staff in a bid to make savings, including the Department for Environment and Rural Affairs, the Foreign Office and the Cabinet Office.

The Department for Health and Social Care and the Ministry of Housing and Local Government have yet to start schemes but it is expected they will, with the former already set to lose staff following the abolition of NHS England that was announced earlier this month.

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Rachel Reeves, the chancellor, confirmed in last week’s spring statement that the government was setting aside £150m to fund the voluntary exit schemes, which differ from voluntary redundancy in that they offer departments more flexibility around the terms offered to departing staff.

Ms Reeves said the funding would enable departments to reduce staffing numbers over the next two years, creating “significant savings” on staff employment costs.

A maximum limit for departing staff is usually set at one month per year of service capped at 21 months of pay or £95,000.

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Whitehall sources stressed the figure was “very much the maximum that could be offered” given that the average civil service salary is just over £30,000 per year.

Whitehall departments will need to bid for the money provided at the spring statement and match the £150m from their own budgets, bringing the total funding to £300m.

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Spring statement 2025 key takeaways

The Cabinet Office is understood to be targeting 400 employees in a scheme that was announced last year and will continue to run over this year.

A spokesman said each application to the scheme would be examined on a case-by-case basis to ensure “we retain critical skills and experience”.

It is up to each government department to decide how they operate their scheme.

The voluntary exit schemes form part of the government’s ambition to reduce bureaucracy and make the state more efficient amid a gloomy economic backdrop.

Ahead of the spring statement, Ms Reeves announced plans to cut civil service running costs by 15% by 2030, which ministers have said will save £2.2bn.

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The move could result in 10,000 civil service jobs being axed after numbers ballooned during the pandemic.

Ms Reeves hopes the cuts, which she said will be to “back office jobs” rather than frontline services, but civil service unions have raised concerns that government departments will inevitably lose skilled and experienced staff.

The cuts form part of a wider government agenda to streamline the civil service and the size of the British state, which Sir Keir Starmer criticised as “weaker than it has ever been”.

During the same speech, he announced that NHS England, the administrative body that runs the NHS, would also be scrapped to eliminate duplication and cut costs.

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