Crypto Tax in the 1099-DA Era: A 2026 US Filing Guide
The 2026 season is the first with Form 1099-DA, and the figure the IRS sees can dwarf your real gain. Here is how US crypto tax works now, from wallet-by-wallet basis to the wash-sale loophole.
The 2026 filing season is the first time most Americans who touch crypto will receive a tax form in the mail about it. Starting with the 2025 tax year, custodial exchanges and other brokers began issuing Form 1099-DA, a new information return that copies the IRS on your digital asset sales. There is a catch that will define this first year: the form reports what you sold your coins for, not what you paid for them, so the number the government sees can look far larger than the gain you actually owe tax on. If you moved coins between platforms, that gap can be enormous.
Awareness has not kept pace with the rulebook. A 2026 CoinTracker survey reported by Forbes found that 61% of crypto investors did not know the new 1099-DA rules existed. This guide is a focused walk through how United States crypto tax works now that the paperwork era has begun: what triggers a bill, why gains and income are rated differently, why your 1099-DA can overstate your gains, and which fights in Washington could rewrite the math next year. For a wider tour of the season, see our companion 2026 investor guide to crypto tax.
Crypto Is Property, and That One Rule Explains Almost Everything
Nearly every quirk of United States crypto tax flows from a single decision the IRS made back in 2014. In Notice 2014-21, the agency declared that convertible virtual currency is treated as property, not as currency. That sounds academic until you see the consequences. Because your Bitcoin or Ether is property, disposing of it is a capital gains event in the same way that selling a share of stock or a rental house is. Your basis is what you paid, including fees. Your gain or loss is the proceeds minus that basis. How long you held the asset decides whether the profit is taxed at friendlier long-term rates or at your higher ordinary rate.
The property label cuts the other way too. When crypto lands in your lap as payment, as a staking reward, or as an airdrop, that is ordinary income measured at the asset fair market value on the day you receive it. You are taxed once when it arrives and again, on any change in value, when you later sell. Keep that two-layer structure in mind, because it is the source of most of the confusion and most of the tax bills that catch people by surprise. The chain never forgets a transaction, and as of this year, neither does the IRS.
What Counts as a Taxable Event, and What Does Not
The single most common mistake new crypto users make is assuming that tax is only due when they cash out to dollars. It is not. Because the IRS treats crypto as property, any disposal is potentially taxable, and swapping one token for another counts as a disposal. If you trade Ether for Solana, the IRS sees you selling Ether at its dollar value that day and buying Solana with the proceeds, so the gain on the Ether is taxable even though you never touched a bank account. Spending crypto works the same way. Buying a laptop with Bitcoin is a sale of that Bitcoin, with gain or loss measured against what you paid for it. Even swapping into a stablecoin like USDC is a taxable disposal of whatever you sold.
| Taxable events | Not taxable on their own |
|---|---|
| Selling crypto for US dollars | Buying crypto with US dollars and holding |
| Trading one token for another, stablecoins included | Transferring crypto between wallets you own |
| Spending crypto on goods or services | Moving coins to or from cold storage |
| Receiving staking, mining, or airdrop rewards | Gifting crypto within the annual exclusion |
| Getting paid in crypto for work | Donating crypto to a qualified charity |
| Earning crypto interest or lending yield | Holding through an unrealized price gain |
Transfers you control are not sales. Moving coins from an exchange to your own hardware wallet, or between two wallets you own, does not trigger tax because you have not disposed of anything. That distinction matters more than ever in the 1099-DA era, because those same untaxed transfers are exactly what strip away the cost-basis trail your broker needs, a problem we return to below.
Form 1099-DA, Explained
Form 1099-DA is the crypto cousin of the 1099-B that stock brokers have sent for decades. Under final regulations the Treasury issued in July 2024, custodial brokers must report the gross proceeds of digital asset sales made on or after January 1, 2025, and send both you and the IRS a copy. You can read the agency summary on the IRS newsroom page. For this first year, brokers report proceeds only; cost-basis reporting phases in for transactions made on or after January 1, 2026, which will land on forms sent in early 2027. The IRS has also granted good-faith penalty relief for 2025, acknowledging that neither brokers nor taxpayers are fully ready.
Not every platform sends the form. The rules target custodial brokers that take possession of the assets being sold: centralized exchanges, certain hosted-wallet providers, digital asset kiosks, and some payment processors. Decentralized front-ends were carved out after Congress killed a separate reporting rule, which we cover later. The practical result is a season that tax professionals expect to be messy. Because gross proceeds without basis tell only half the story, the risk of mismatched numbers and confused filers is high, and the responsibility for getting the final figure right falls on you.
It helps to see the rollout as a staircase. For 2025 activity, forms arriving in early 2026 show gross proceeds alone. For 2026 activity, brokers begin adding cost basis, so the forms sent in 2027 will look much closer to a complete picture. Until then, expect a form from every custodial platform where you sold, and expect the basis column to be blank or unreliable whenever the coins you sold first arrived from somewhere else. Treating each 1099-DA as a claim to verify, rather than a verdict to accept, is the right mindset for the transition years.
The Gross-Proceeds Trap: Why Your 1099-DA Can Overstate Your Gains
Here is the scenario that will trip up thousands of filers. You bought Bitcoin on one exchange for 30,000 dollars, moved it to a second exchange, and later sold it there for 40,000 dollars. Your real gain is 10,000 dollars. But the selling exchange never saw your purchase, so it cannot report your basis. Its 1099-DA may show a 40,000 dollar sale against a blank or zero basis, implying a 40,000 dollar gain. As Lawrence Zlatkin, vice president of tax at Coinbase, told The Block, “Taxpayers will need their own basis information to calculate their gains and losses on their tax returns.” The form is a starting point, not the answer.
Because the IRS receives that gross-proceeds figure, a return that reports a smaller number can draw an automated notice asking you to reconcile the difference. The defensive move is to make sure the proceeds you enter on Form 8949 at least match, and ideally line up cleanly with, what the 1099-DA shows, then apply your correct basis to arrive at the real gain. The math gets brutal for active traders. Shehan Chandrasekera, head of tax strategy at CoinTracker, warned in the same report that “if you are involved in DeFi and have transactions and transfers between multiple wallets and exchanges, it is virtually impossible for you to reconcile your crypto taxes manually.” Anyone using on-chain perp DEXs or bridging across chains will generate a stream of disposals that no single form captures. Miles Fuller, senior director of government solutions at Taxbit, put the root cause plainly: “The difficulty, in my mind, stems from two issues: a lack of good data and technology gaps.”
The End of Universal Wallet Accounting
Alongside the new form came a quieter change that reshaped how you are allowed to track basis. For years, many investors used a universal or pooled method, treating all their coins of one type as a single stack no matter which wallet held them. Revenue Procedure 2024-28 ended that. As of January 1, 2025, you must track basis on a wallet-by-wallet or account-by-account basis, matching each disposal to lots held in that specific location. Advisers at RSM described the shift as the end of universal wallet accounting.
To bridge the gap, the IRS offered a one-time safe harbor. Taxpayers could reasonably allocate their unused basis from before 2025 across their wallets, so long as the allocation was completed by the earlier of their first disposition after January 1, 2025, or the due date of the 2025 return. A follow-up notice, Notice 2025-7, then softened the landing further: for 2025, holders may rely on their own books and records to identify which specific units they sold, rather than being forced into the broker default of first-in, first-out. If you held crypto across multiple wallets before this year and never did the allocation, that is a gap worth closing with a professional before you file.
Within a single wallet, you still choose how to match lots. The default method is first-in, first-out, which sells your oldest coins first and, in a rising market, tends to realize the largest gain. If you keep adequate records, you can instead use specific identification to pick exactly which units you sell, and many investors favor a highest-in, first-out approach to surrender their most expensive lots first and shrink the taxable gain. The catch under the new regime is timing: to use specific identification through a broker, you generally have to tell it which units to sell at or before the moment of the trade, not months later when you sit down to file.
How Your Gains Are Taxed: Short-Term Versus Long-Term
Once you know your gain, the rate depends almost entirely on your holding period. Sell a coin you held for one year or less and the profit is a short-term gain, taxed at your ordinary income rate, which for 2025 runs from 10% to 37%. Hold for more than a year and you unlock the preferential long-term rates of 0%, 15%, or 20%, tiered by taxable income. The Tax Foundation publishes the current thresholds, summarized below. High earners may also owe the 3.8% Net Investment Income Tax on top of the headline rate, which applies once modified adjusted gross income passes 200,000 dollars for single filers or 250,000 dollars for joint filers.
| Holding period | Tax treatment | 2025 rate |
|---|---|---|
| One year or less (short-term) | Taxed as ordinary income | 10% to 37% |
| Over one year, lower incomes | Preferential long-term rate | 0% up to 48,350 dollars single, 96,700 dollars joint |
| Over one year, middle incomes | Preferential long-term rate | 15% |
| Over one year, high incomes | Preferential long-term rate | 20% over 533,400 dollars single, 600,050 dollars joint |
| High earners, any capital gain | Net Investment Income Tax added | plus 3.8% |
The lesson for planning is simple but powerful: patience is a tax strategy. The difference between selling at day 364 and day 366 can be the difference between paying 37% and paying 20% on the same profit. It is one of the few levers ordinary investors control without any exotic structuring.
Gains and losses do not stand alone; they net against each other in a set order. Short-term losses first offset short-term gains, long-term losses offset long-term gains, and any leftover on one side then offsets the other. Only after that netting do you arrive at a single figure, and a net loss can reduce your ordinary income up to an annual limit, with the remainder carried forward indefinitely. Because short-term gains are taxed so much harder, steering your losses to cancel them first is usually where the real savings hide.
When Crypto Is Ordinary Income: Staking, Mining, Airdrops, Forks
Not all crypto tax is capital gains. When you earn coins rather than buy them, the IRS treats the arrival as ordinary income at fair market value, taxed at your regular rate. Staking is the clearest example. In Revenue Ruling 2023-14, the IRS concluded that proof-of-stake rewards are income in the year you gain dominion and control over them, meaning the moment you can sell or move them. The Journal of Accountancy summarized the ruling when it landed. Mining rewards follow the same logic under Notice 2014-21, and if you mine as a trade or business, the income also carries self-employment tax; the economics of that are covered in our look at crypto energy costs.
Airdrops and hard forks get the same treatment. In Revenue Ruling 2019-24, analyzed here by Fenwick, the IRS said tokens received from an airdrop or a fork are ordinary income at fair market value once you control them. The value you report becomes your basis, which sets up the second layer of tax when you later sell. The table below maps the common ways crypto arrives as income and how each is treated.
| How you received it | Tax at receipt | Governing guidance |
|---|---|---|
| Staking rewards | Ordinary income at fair market value when you control them | Rev. Rul. 2023-14 |
| Mining rewards | Ordinary income, plus self-employment tax if a business | Notice 2014-21 |
| Airdrops | Ordinary income at fair market value when recorded to your wallet | Rev. Rul. 2019-24 |
| Hard fork with new coins | Ordinary income if you receive and control new coins | Rev. Rul. 2019-24 |
| Crypto paid for work | Wages or self-employment income at fair market value | Notice 2014-21 |
| Lending or DeFi yield | Ordinary income at fair market value when received | General property rules |
The trap here is timing. You owe income tax on a reward at its value on the day it arrives, even if the token later crashes and you never sell. Investors who received rich staking or airdrop income in a bull month and then watched prices fall have been left owing tax on paper wealth that evaporated. Setting aside dollars as rewards accrue is the only reliable defense.
NFTs and the 28% Collectibles Question
Non-fungible tokens sit in their own corner of the code. In Notice 2023-27, the IRS signaled that it may treat certain NFTs as collectibles, the same category as art, coins, and antiques. That matters because collectibles held longer than a year are taxed at a maximum long-term rate of 28%, higher than the 20% ceiling on ordinary capital assets. As the law firm DLA Piper explained, the IRS proposed a look-through analysis: if the asset an NFT represents would itself be a collectible, such as a piece of digital art, the NFT is taxed as a collectible.
Not every NFT is caught. A token that confers a utility right, membership, or something outside the collectibles definition would fall back to normal capital gains rates. Because the guidance is still framed as an intent rather than a finished rule, and because look-through can be subjective, NFT collectors face genuine uncertainty. If you flip high-value art NFTs, assume the 28% rate may apply and keep records of what each token actually represents.
The Wash-Sale Loophole That Refuses to Close
One of the friendliest features of crypto tax is a rule that does not apply to it. The wash-sale rule under Section 1091 blocks investors from claiming a loss on a stock if they buy it back within 30 days. That rule is written for securities, and because the IRS treats crypto as property rather than a security, it does not currently reach digital assets. The tax attorneys at Gordon Law confirm the gap remains open in 2026. In practice that means you can sell a losing position to book the loss and repurchase the same coin minutes later, keeping your exposure while harvesting a deduction.
Those losses are valuable. Capital losses offset capital gains dollar for dollar, and up to 3,000 dollars of net loss can offset ordinary income each year, with the rest carried forward. Worthless and stolen coins are murkier. A token that goes to zero is generally not a deductible loss until you actually dispose of it, and the on-chain evidence of a scam does not by itself unlock a write-off; our guide to rug pull forensics shows how hard it can be to prove what happened. Personal theft losses are largely non-deductible through 2025 under current law, outside narrow exceptions. Congress has repeatedly proposed extending the wash-sale rule to crypto, but none of those proposals has become law, so the loophole survives for now.
The DeFi Reporting Rule That Congress Killed
The 1099-DA regime was almost far broader. In December 2024, the Treasury finalized a separate rule that would have treated decentralized finance front-ends as brokers, forcing them to collect user identities and file 1099-DAs for on-chain swaps. The industry argued that a smart-contract interface has no way to know who its users are. Congress agreed. Using the Congressional Review Act, lawmakers passed House Joint Resolution 25, and President Trump signed it on April 10, 2025, formally voiding the DeFi broker rule. The House Ways and Means Committee called it the first standalone crypto measure ever signed into law. Under the CRA, the agency cannot reissue a substantially similar rule without fresh authorization from Congress.
Here is the part that gets lost in the celebration: killing the reporting rule did not change anyone tax liability. If you earn or realize gains through a decentralized exchange, those amounts are still fully taxable. All the repeal did was remove the requirement that the protocol send you and the IRS a form. The obligation to track and report your own DeFi activity is entirely on you, and given how many taxable events a single yield strategy can spin off, that is a heavier burden than a form would have been.
What Lands on Your Return: Forms and the Digital-Asset Question
When it is time to file, crypto flows into the same forms as other investments. Capital gains and losses from sales, trades, and spends go on Form 8949, which totals into Schedule D. Crypto received as income, such as staking rewards, airdrops, or lending yield, goes on Schedule 1 as other income, or on Schedule C if you earned it through a trade or business, where self-employment tax also applies. At the very top of Form 1040 sits the digital asset question, and the IRS is emphatic that everyone must answer it, checking yes or no, whether or not they touched crypto during the year.
Two points cause the most trouble. First, not receiving a 1099-DA does not excuse you from reporting; the form is informational, and your duty to report exists regardless of what paperwork arrives. Second, leaving the digital asset question blank is a documented red flag, so answer it honestly even if all you did was buy and hold. The safest posture in the 1099-DA era is to assume the IRS already has data on your custodial sales and to file a return that reconciles with it.
Good records are what make all of this survivable. For every acquisition, keep the date, the fair market value in dollars, the amount, and any fees; for every disposal, keep the same details plus the proceeds. Wallet addresses, exchange statements, and transaction IDs turn a vague memory into defensible basis. The people who struggle at filing time are rarely those with the most complicated portfolios; they are the ones who never exported their history and now cannot prove what they paid.
Washington Unfinished Business: The Lummis Bill
The biggest crypto tax reforms are still stuck in the legislative pipeline. When the One Big Beautiful Bill Act was signed on July 4, 2025, it contained no crypto tax provisions, despite an effort to attach them. Days later, Senator Cynthia Lummis introduced a standalone digital asset tax bill. As Grant Thornton detailed, it would create a de minimis exemption for personal transactions with gains of 300 dollars or less, capped at 5,000 dollars a year and indexed for inflation, so that buying a coffee with Bitcoin would no longer be a taxable event to track.
The bill goes further. It would defer income tax on mining and staking rewards until the coins are actually sold, ending the tax-on-receipt problem that leaves people owing tax on rewards they never cashed out. It would also extend wash-sale rules to digital assets, closing the loophole described above, and add provisions for lending and charitable gifts. Supporters point out that the Joint Committee on Taxation scored the package as modestly revenue-positive over its first decade, undercutting the notion that crypto relief must cost the Treasury. Whether it passes is another question; crypto legislation has a long history of slipping deadlines, as our regulatory countdown tracks. For now, treat the current rules, not the proposed ones, as reality.
A Revolving Door at the IRS
The agency writing and enforcing these rules has been in turmoil. Two private-sector experts recruited to lead the IRS digital assets office, Sulolit Raj Mukherjee and Seth Wilks, departed in the spring of 2025 after accepting deferred resignation offers. Trish Turner, a veteran official tapped to take over, then left for the private sector herself. CoinDesk reported the exits as the tax changes were taking effect, leaving the unit thin on senior leadership at exactly the moment its signature reporting regime came online.
Do not mistake leadership churn for weak enforcement. The 1099-DA data feed does the heavy lifting that staff once had to chase through John Doe summonses to exchanges. Automated matching, in which the IRS compares reported proceeds against your return, scales without headcount. The likeliest enforcement story of the next few years is not dramatic raids but a wave of computer-generated notices flagging returns that do not line up with broker data. Fewer people at the top, more data at the bottom.
How to Prepare for the 2026 Filing Season
The winning move this year is documentation, not cleverness. A short checklist covers most of the risk:
- Gather every record now. Export transaction histories from each exchange and wallet before you lose access; the burden of proving basis is on you, not the broker.
- Reconcile each 1099-DA against your own numbers, and make sure the proceeds you report match or exceed what the form shows.
- Confirm your wallet-by-wallet basis. If you held crypto before 2025, check that the Revenue Procedure 2024-28 allocation was done, then track lots per account going forward.
- Do not ignore small income. Staking drips, referral bonuses, and airdrops are taxable at receipt even when no form arrives.
- Answer the digital asset question on Form 1040. Everyone must check yes or no; a blank is a red flag.
- Consider harvesting losses before December 31, since the wash-sale rule does not yet apply to crypto.
- Use tax software or a specialist if you touch DeFi or multiple chains, where manual reconciliation is close to impossible.
- Watch Washington. A de minimis exemption or a staking-deferral rule could change your planning for next year.
The through-line of the 1099-DA era is transparency. For a decade, crypto tax ran largely on the honor system because the IRS lacked data. That era is over. The investors who sail through 2026 will be the ones who treat their own records as the source of truth and use the new forms as a cross-check, not a crutch.
Frequently Asked Questions
Do I have to report crypto if I did not receive a 1099-DA?
Yes. Form 1099-DA is an information return, not the thing that creates your tax duty. You must report every sale, trade, and disposal, along with all crypto income, whether or not a broker sends you a form. Missing paperwork does not make a gain tax-free.
Is moving crypto between my own wallets taxable?
No. Transferring coins between wallets or accounts you control is not a disposal, so there is no gain or loss. Be careful, though, because these transfers can break the cost-basis trail brokers rely on, which is a common cause of inflated 1099-DA figures.
How are staking rewards taxed in the United States?
Under Revenue Ruling 2023-14, staking rewards are ordinary income at their fair market value on the date you gain dominion and control over them. When you later sell those coins, you also owe capital gains tax on any change in value since receipt.
Does the wash sale rule apply to crypto in 2026?
No. Because the IRS treats crypto as property rather than a security, the wash-sale rule does not currently apply, so you can sell at a loss and repurchase right away to harvest the loss. Congress has proposed closing this gap, but no such law is in effect.
What tax rate will I pay on my crypto gains?
It depends on how long you held the asset. Coins held one year or less are taxed at ordinary rates as high as 37 percent, while coins held longer than a year qualify for long-term rates of 0, 15, or 20 percent, with a possible extra 3.8 percent Net Investment Income Tax for higher earners.
By the HOGE Wire regulation desk. This article is general information, not tax or legal advice; consult a qualified professional about your own situation.