If you sold, swapped, staked, or spent crypto, the IRS almost certainly expects something from you this year — and for the first time, it's getting a copy of your numbers directly from the exchanges. The Form 1099-DA era began with 2025 transactions, and 2026 is the year broker reporting gets teeth. Here's what's taxable, what changed, and how to keep your records from becoming an archaeology project.
What counts as a taxable crypto event?
The IRS treats digital assets as property, not currency. That single fact drives everything: nearly every disposal of crypto is a taxable event, whether or not dollars ever touched your bank account.
Generally taxable:
Get our starter pack of tax guides, free.
One welcome email with our most-used guides, then a few genuinely useful ones a month. Unsubscribe anytime.
- Selling crypto for cash — gain or loss versus your cost basis.
- Swapping one coin or token for another — yes, crypto-to-crypto trades are disposals. There is no like-kind deferral for crypto (that door closed after 2017).
- Spending crypto on goods or services — buying a laptop with crypto is a sale of the crypto at fair market value, gain or loss included.
- Getting paid in crypto — ordinary income at fair market value when received (and self-employment income if you're a contractor).
- Staking rewards, mining income, most airdrops — ordinary income when you gain control of the assets (more below).
Generally not taxable by themselves: buying crypto with dollars and holding it, moving coins between wallets you own, or gifting crypto within the gift-tax rules (the annual exclusion is $19,000 per recipient for 2026). Donating appreciated crypto to charity can even earn a deduction — though gifts over $5,000 generally require a qualified appraisal, a rule that surprises a lot of generous holders.
And answer the digital-asset question on page one of your Form 1040 honestly. It's asked under penalties of perjury, and "No" next to a stack of 1099-DAs is a bad look.
What changed with Form 1099-DA in 2025 and 2026?
This is the biggest structural change in crypto tax since the 1040 question appeared:
- For 2025 transactions (forms that arrived in early 2026), custodial brokers — exchanges, hosted wallet providers, crypto kiosks, certain payment processors — were generally required to report your gross proceeds on the new Form 1099-DA. The IRS granted good-faith penalty relief for this first year, and some brokers were permitted to furnish forms late, so coverage is uneven — but the matching program has begun.
- For 2026 transactions, reporting expands: brokers must generally also report cost basis for covered assets acquired through that broker on or after January 1, 2026. Your 2026 form (arriving early 2027) will start to look much more like a stock 1099-B.
- DeFi is different. The separate rule that would have treated certain non-custodial/DeFi front-ends as brokers was repealed by Congress in 2025, so self-custody and DeFi activity generally won't generate a 1099-DA — but it's still fully taxable and still your job to report.
The practical takeaway: the IRS now sees your proceeds but often not your true basis, especially for coins you bought years ago or transferred between platforms. If you don't document basis, you risk being taxed as if the entire sale were profit.
How do you track cost basis under the new wallet-by-wallet rules?
Since January 1, 2025, basis must generally be tracked wallet-by-wallet (account-by-account) under Rev. Proc. 2024-28 — the old "universal pool" approach, where you treated all your holdings as one big bucket, is dead. Each wallet or exchange account carries its own lots, and when you sell, you identify which lots from that wallet you sold (specific identification if adequately documented, otherwise first-in, first-out within the wallet).
What good hygiene looks like in 2026:
- Export transaction histories from every exchange and wallet, every year — platforms disappear, and their records go with them.
- Record the date, amount, and fair market value of every receipt of crypto (purchases, income, rewards), because that's what sets your basis.
- Use reputable crypto tax software or a preparer who works in this area; reconciling transfers between your own wallets is where most DIY returns go wrong.
- Keep the documentation behind any specific-identification choices at or before each sale.
How are staking, mining, and airdrops taxed?
Under Rev. Rul. 2023-14 and related guidance, staking rewards are ordinary income at fair market value when you gain dominion and control — generally when you can transfer or sell them. Mining works the same way (and rises to self-employment income if it's a trade or business). Airdrops and hard-fork coins are generally income when received under Rev. Rul. 2019-24.
The value you report as income then becomes your basis in those coins, so you aren't taxed twice on the same dollars when you later sell — you're taxed on the change in value since receipt. People who skip the income step and report only the sale usually overpay or underpay without knowing it.
What tax rates apply to crypto gains in 2026?
The same capital-gains architecture as stocks:
| Event / holding period (TY2026) | General federal treatment |
|---|---|
| Sale or swap held more than one year | Long-term capital gain — 0%, 15%, or 20% depending on taxable income |
| Sale or swap held one year or less | Short-term capital gain — ordinary rates up to 37% |
| Staking, mining, airdrops, getting paid | Ordinary income at fair market value when received |
| Spending crypto | Disposal — capital gain or loss on the coins spent |
| Net capital losses | Offset gains, then up to $3,000/year against ordinary income; the rest carries forward |
| High earners | 3.8% net investment income tax can stack on top |
A hedged example, tax year 2026: Maya bought a token position for $8,000 in March 2025 and swaps it for another token in June 2026 when it's worth $13,000. That's a long-term gain of roughly $5,000, taxed at 15% for most middle-to-upper incomes — about $750 of federal tax, owed even though she never cashed out to dollars. If she'd swapped after eleven months instead, the same $5,000 could have been taxed at her ordinary rate — at 24%, roughly $1,200. Holding periods are a real planning lever, not trivia.
One more 2026 planning note: the wash-sale rule still does not apply to crypto under current law as of this writing, so harvesting a loss and repurchasing is generally permitted — but Congress has proposed changing that more than once, so confirm the state of the law before you rely on it late in the year.
What are the most common crypto tax mistakes?
- Assuming "no 1099 = not taxable." DeFi trades, peer-to-peer sales, and older exchange activity are taxable with or without a form.
- Ignoring swaps and spending. Every disposal counts, even a $60 coffee-and-merch purchase.
- Losing basis records from defunct exchanges — then facing a 1099-DA showing proceeds with no offsetting cost.
- Skipping the income step on staking and mining rewards.
- Amnesia about prior years. If earlier returns missed crypto, amending before the IRS matches you is dramatically cheaper than after. This is exactly the situation our clients bring us mid-year, and it's fixable. Problems come here to get solved.
The reporting rules for 2026 are part of a much bigger wave of changes — the 2026 tax changes hub has the full map, and our pricing page shows what crypto-inclusive tax prep costs at WAYG (flat fees, no hourly meter).
FAQ
Is moving crypto between my own wallets taxable?
No — transfers between wallets or accounts you own aren't disposals. But keep records: under wallet-by-wallet tracking, the basis and holding period must follow the coins, and unexplained transfers are where reconciliations break.
Do I owe taxes if I only bought and held in 2026?
Generally no. Buying with dollars and holding isn't taxable, and you can typically answer "No" to the 1040 digital-asset question if that's truly all you did (receiving crypto as income, or disposing of any, flips that answer to "Yes").
Does the wash-sale rule apply to crypto?
Not under current law as of mid-2026 — crypto isn't treated as a "security" for that rule. Tax-loss harvesting remains available, but watch for legislation; this is a frequently proposed change.
What if I never reported crypto in past years?
You're not alone, and there's a path: quantify the exposure, amend what's material, and get current-year reporting clean before broker matching escalates. Voluntary correction almost always beats an IRS-initiated exam.
Will I get a 1099-DA from my DeFi protocol or self-custody wallet?
Generally no — the rule covering non-custodial platforms was repealed in 2025. Custodial exchanges and similar brokers issue 1099-DAs; your self-custody activity is self-reported (but no less taxable).
Reviewed by the WAYG tax team · Updated July 2026
Have a question about your own situation? Book a free 15-min call at wayg.co/book-call — or email hello@wayg.co. A real person replies within one business day.