How crypto is taxed
Tax authorities generally treat cryptocurrency as property, not currency. That means every time you dispose of it you realize a capital gain or loss — the difference between what you receive and your original cost basis. The surprise for many people is how broad “disposal” is: it isn’t just cashing out to dollars.
What counts as a disposal
- • Selling crypto for cash.
- • Trading one crypto for another — e.g. swapping BTC for ETH realizes the gain on your BTC.
- • Spending crypto on goods or services — you’ve sold it at its market value that day.
Buying and simply holding is not a taxable event.
Worked example
Take three disposals in one tax year: BTC sold for $9,000 on a $5,000 cost basis after 18 months, ETH sold at a loss ($3,000 proceeds on $4,000 basis, 8 months), and SOL sold for $2,500 on $1,000 basis after 5 months — with a 32% short-term rate and a 15% long-term rate:
| Step | Amount |
|---|---|
| Total proceedsfair-market value received across all three disposals | $14,500 |
| − Total cost basiswhat the disposed coins originally cost | $10,000 |
| = Net gain$500 short-term + $4,000 long-term, after the ETH loss nets against the SOL gain | $4,500 |
| = Estimated tax32% on the short-term net + 15% on the long-term net | $760 |
Computed with this calculator's default settings — open the tool above and you'll see the same numbers, then swap in your own transactions.
Built to handle every crypto disposal at once
- Many transactions at once. Real crypto activity is a list of disposals, not one tidy sale. Add every lot and see the whole picture together.
- Short vs. long-term, separated. Each disposal is classified by holding period and taxed at the right rate — ordinary income for short-term, preferential for long-term.
- Capital-loss netting. Gains and losses net within and across holding classes, so losing positions actually reduce your bill.
- It catches the taxable events you’d miss. Every row — including crypto-to-crypto swaps and crypto you spent — is a taxable disposal.
Frequently asked questions
Is cryptocurrency taxed?
Yes. In most jurisdictions, including the US, crypto is treated as property, so disposing of it triggers a capital gain or loss. You owe tax on the gain — proceeds minus what you originally paid (your cost basis). Simply buying and holding crypto is not taxable; the tax event happens when you sell, trade, or spend it.
What’s the difference between short-term and long-term crypto gains?
It comes down to how long you held the coin before disposing of it. Hold for one year or less and the gain is short-term, taxed at your ordinary-income rate. Hold for more than a year and it’s long-term, taxed at preferential capital-gains rates (0%, 15%, or 20% in the US). The same coin can cost you far more in tax if sold a few days too early — this calculator separates the two so you can see the split.
Are crypto-to-crypto trades and spending crypto taxable?
Yes — and this is what catches people out. Trading one cryptocurrency for another (say BTC for ETH) is a disposal of the BTC, so you realize a gain or loss on it even though no cash was involved. The same is true when you spend crypto on goods or services: you’ve effectively sold the crypto at its market value that day. Every disposal in this calculator is treated as a taxable event for exactly this reason.
How does tax-loss harvesting work with crypto?
Losing positions aren’t all bad news at tax time. When you realize a loss, it nets against your realized gains, lowering your taxable amount. If your losses exceed your gains, you can typically offset up to $3,000 of ordinary income per year (US) and carry the rest forward. This calculator nets gains and losses across all your transactions, so you can see the effect immediately.
Do I have to report crypto if I only bought it?
Buying crypto with cash and holding it is not a taxable event, and on its own it produces no gain to report — though tax forms increasingly ask whether you held digital assets at all. The tax obligation arises only once you dispose of it: selling, trading for another coin, or spending it. Until then there’s no gain or loss to calculate.
Sources
The official figures this page quotes are drawn from the primary sources above — check them (or a qualified professional) before relying on a result.
Disclaimer: This calculator is a simplified estimate for educational purposes only — not tax advice. It applies flat rates you enter and a simplified loss-netting model; it does not handle the $3,000 ordinary-income offset cap, loss carry-forwards, the tiered long-term brackets, NIIT, state tax, or wash-sale nuances, and it excludes income-side events like mining and staking. Tax rules vary by jurisdiction and change often — consult a qualified tax professional.