I'm a developer, not a tax professional. This guide is researched directly from IRS.gov and verified 2026 sources (linked throughout) but hasn't been reviewed by a CPA. Verify against official guidance before filing.
| Category | Holding period | 2026 tax rate |
|---|---|---|
| Short-term capital gain | 366 days or less (1 year or less) | Ordinary income rate: 10%–37% |
| Long-term capital gain | More than 1 year (367+ days) | Preferential rate: 0%, 15%, or 20% |
Selling for USD, swapping one token for another, spending crypto on goods or services — every disposal triggers a gain or loss that is classified as short-term or long-term based on how long you held the specific units disposed of. The holding period resets every time you acquire new units, even of the same token.
If you buy crypto on January 15, 2025, you must hold it until at least January 16, 2026 for it to qualify as a long-term gain. Selling on January 15, 2026 — exactly 365 days later — is still short-term. The IRS counts from the day after acquisition, so you need one year plus one day: 366 days minimum. This is the most common and most expensive holding period mistake.
When you swap Token A for Token B, your holding period in Token B starts fresh on the date of the swap. The time you held Token A does not carry over. If you held BTC for 11 months and swap it for ETH, your ETH holding period starts at zero — you need to hold the ETH for another 12+ months (366+ days) for any future ETH gain to qualify as long-term.
| Tax rate | Single filer income | Married filing jointly |
|---|---|---|
| 10% | $0 – $11,925 | $0 – $23,850 |
| 12% | $11,926 – $48,475 | $23,851 – $96,950 |
| 22% | $48,476 – $103,350 | $96,951 – $206,700 |
| 24% | $103,351 – $197,300 | $206,701 – $394,600 |
| 32% | $197,301 – $250,525 | $394,601 – $501,050 |
| 35% | $250,526 – $626,350 | $501,051 – $751,600 |
| 37% | Over $626,350 | Over $751,600 |
If you earn $80,000 in salary and realise a $50,000 short-term crypto gain, your total income is $130,000. The first $103,350 of your income is taxed at lower rates. Only the portion above $103,350 gets taxed at 24%. Your effective rate on the full $130,000 is lower than 24% — but the marginal rate on the top slice of your gain is 24%. Use our calculator to model different selling scenarios before you sell.
| Long-term CGT rate | Single filer taxable income | Married filing jointly | Head of household |
|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $66,200 |
| 15% | $49,451 – $545,500 | $98,901 – $613,700 | $66,201 – $579,600 |
| 20% | Over $545,500 | Over $613,700 | Over $579,600 |
If your total taxable income — including your long-term crypto gains — stays below $49,450 (single) or $98,900 (married filing jointly), you pay zero federal tax on those long-term gains. This isn't a loophole — it's a designed bracket. Low-to-moderate income investors, part-year workers, retired investors, or anyone with significant deductions may qualify. Calculate your total taxable income (after deductions) before assuming you owe anything on a long-term gain.
| Filing status | MAGI threshold |
|---|---|
| Single / Head of Household | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
If you're a single filer with $300,000 in income and a large long-term crypto gain, your effective federal rate on that gain isn't 20% — it's 23.8% (20% long-term rate + 3.8% NIIT). At the top short-term rate, you could face up to 40.8% in combined federal tax (37% + 3.8%) before state taxes. A large crypto sale can push you above the NIIT threshold even if your regular income is below it — so model the full-year impact of any significant sale before executing.
If you have both short-term gains and long-term losses in the same year, the long-term losses offset your short-term gains first — saving you tax at the higher short-term rate rather than the lower long-term rate. This is why timing your loss harvesting to offset the right type of gain matters. A $5,000 long-term loss offsetting a $5,000 short-term gain (taxed at 24%) saves you $1,200. The same loss offsetting a $5,000 long-term gain (taxed at 15%) saves you only $750.
Under IRS Rev. Proc. 2024-28, effective January 1, 2025, you can no longer treat all your crypto holdings across all exchanges and wallets as one universal pool. Each wallet and exchange must track its own cost basis independently. This means the holding period of specific coins is now tied to where they are held — you can't selectively move coins between wallets to manipulate which units you're "selling." If you moved coins between wallets before this rule took effect without proper documentation, reconcile your records now.
For 2025 transactions, exchanges only reported gross proceeds on Form 1099-DA. Starting with 2026 transactions, basis reporting is also required for covered digital assets. This means the IRS will receive both your sale price and your cost basis directly from your exchange — and will flag discrepancies between broker-reported data and what you report on Form 8949. If your records don't match your exchange's records, you will receive an IRS mismatch notice.
On a $60,000 gain at the same income level, the short-term tax would be $13,200 vs. long-term $9,000 — a $4,200 difference from waiting. At higher income levels where the short-term rate is 32% or 35% and the long-term rate stays at 15%, the gap is even more dramatic. The holding period decision is one of the highest-value planning moves available to crypto investors.