Crypto tax basics.

In plain English

Crypto tax basics covers how the IRS treats digital assets such as Bitcoin and other tokens for tax purposes. The IRS treats crypto as property, not cash, so you generally owe tax when you sell it, trade one coin for another, or use it to buy something, based on how much its value changed since you got it. Getting crypto as payment or as rewards is usually taxed as income at its value that day. Every tax return asks a yes or no question about digital asset activity. Under the new Form 1099-DA rules, brokers report gross proceeds from crypto sales made on or after January 1, 2025, and add cost-basis reporting for certain transactions starting in 2026.

01Why it matters

People think crypto is untracked, but exchanges now report your activity to the IRS, and even swapping one coin for another can create a tax bill you did not expect.

02The math, step by step

Say you buy a coin for $1,000 and later trade it for another coin when the first is worth $1,800. That $800 increase is a taxable gain, even though you never converted it to dollars, and you report it on your return. For 2025 sales your broker reports the proceeds to the IRS, and basis reporting phases in for 2026, so check what your exchange shows on your Form 1099-DA for the year.

03What this is NOT

04Receipts

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