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    Cryptocurrency Tax in United States

    Capital City
    Washington, D.C.

    Currency
    United States Dollar

    Languages Spoken
    American English

    Posted by

    Maitreyee Somvanshi
    Market Research Intern, Octaloop |

    The United States of America is one of the countries with properly laid out tax regimes for cryptocurrency, entailing the nature of transactions and categorisation of these assets. Recently, Biden announced a set of reforms regarding crypto taxation in the United States. 

    A large proportion of US population owns crypto, amounting to a rough 50 million or one-fifth of the population. 

    Do you have to pay crypto tax in the United States? 

    Yes, in the United States crypto is either taxed as capital gains or as income, depending upon the type of transaction and the duration for which you have held the asset.

    When do you have to pay tax on crypto in the United States?

    Transactions like selling crypto, spending it to pay for goods and services, swapping it or getting paid in crypto are subject to taxes in the United States.

    What crypto transactions are taxable in the United States?

    As capital gains, selling crypto, using it for payments and swapping it is taxable.

    As income, getting paid in crypto and getting crypto in exchange for goods or services is taxable.

    What are the Crypto Tax Rates in the United States?

    AS CAPITAL GAINS

    Single taxpayersMarried filing jointlyHead of householdMarried filing separatelyLong-term capital gains rate (%)
    Up to 41,675Up to 83,350Up to 55,800Up to 41,6750
    41,676 to 459,75983,351 to 517,20055,801 to 488,50041,676 to 258,60015
    Over 459,750Over 517,200Over 488,500Over 258,60020

    AS INCOME

    Single Taxpayers Taxable income (USD)Married TaxpayersHead of Household TaxpayersMarried Taxpayers (filing separately)Tax rate (%)
    0 to 10,2750 to 20,5500 to 14,6500 to 10,27510
    10,276 to 41,77520,551 to 83,55014,651 to 55,90010,276 to 41,77512
    41,776 to 89,07583,551 to 178,15055,901 to 89,05041,776 to 89,07522
    89,076 to 170,050178,151 to 340,10089,051 to 170,05089,076 to 170,05024
    170,051 to 215,950340,101 to 431,900170,051 to 215,950170,051 to 215,95032
    215,951 to 539,900431,901 to 647,850215,951 to 539,900215,951 to 323,92535
    539,901+647,851+539,901+323,926+37

    United States Income Tax Brackets (2023)

    Single Taxpayers Taxable income (USD)Married TaxpayersHead of Household TaxpayersMarried Taxpayers (filing separately)Tax rate (%)
    0 to 10,2750 to 20,5500 to 14,6500 to 10,27510
    10,276 to 41,77520,551 to 83,55014,651 to 55,90010,276 to 41,77512
    41,776 to 89,07583,551 to 178,15055,901 to 89,05041,776 to 89,07522
    89,076 to 170,050178,151 to 340,10089,051 to 170,05089,076 to 170,05024
    170,051 to 215,950340,101 to 431,900170,051 to 215,950170,051 to 215,95032
    215,951 to 539,900431,901 to 647,850215,951 to 539,900215,951 to 323,92535
    539,901+647,851+539,901+323,926+37

    United States Short Term Capital Gain Tax Rates (2023)

    Single filersMarried couples filing jointlyHead of householdTax Rate
    Up to $11,000Up to $22,000Up to $15,70010%
    $11,001– $44,725$22,001– $89,450$15,701– $59,85012%
    $44,726– $95,375$89,451– $190,750$59,851– $95,35022%
    $95,376– $182,100$190,751– $364,200$95,351– $182,10024%
    $182,101– $231,250$364,201– $462,500$182,101– $231,25032%
    $231,251– $578,125$462,501– $693,750$231,251– $578,10035%
    $578,125+$693,750+$578,100+37%

    United States Long Term Capital Gain Tax Rates (2023)

    Single taxpayersMarried filing jointlyHead of householdMarried filing separatelyLong-term capital gains rate (%)
    Up to 41,675Up to 83,350Up to 55,800Up to 41,6750
    41,676 to 459,75983,351 to 517,20055,801 to 488,50041,676 to 258,60015
    Over 459,750Over 517,200Over 488,500Over 258,60020

    How is Tax Calculated on Cryptocurrency in the United States?

    Crypto tax in the United States can be levied based upon two categories: capital gains tax and income tax.

    Crypto is taxed as income tax whenever you are getting paid in crypto or staking crypto.

    Capital Gain tax rates are levied when you sell crypto, trade crypto or you spend in crypto. If you have held the assets for less than a year before disposing of them, short term capital gains are levied. Otherwise, if these assets were held for longer than an year and then disposed of, long term capital gain tax rates are levied. 

    Now, in order to determine the values of your capital gain, you need to calculate the values at which you acquired the asset and at the value you sold it. There are two ways to go about this: First in First out (FIFO) and Average Costs Based (ACB).

    According to FIFO Method, you sell your oldest acquired coin first and cost is calculated according to the respective prices at which the coin was bought. Whereas, in ACB, time of buying doesnt matter and average cost is taken into account.

    Let’s take an example,

    Say you bought 2 BTC for $20,000 in 2020 and 4 BTC for $60,000 in 2021. Then you sold 4 BTC in 2022 for $100,000:

    • FIFO METHOD

    You sell 2 BTC from 2020 and 2 BTC from 2021. So cost price is:

    = 20,000 + (2/4)*60,000

    =  $50,000 

    Profit = 1,00,000 – 50,000

             = $50,000

    Here, taxes are levied on  $50,000 .

    • ACB METHOD:

    All coins are of the same denomination. Therefore, cost price for one coin:

    = (20,000 + 60,000)/6

    =  $13,333 

    So, cost price of 4 coins:

    =  $53,333 

    Profit = 1,00,000 – 53,333

             = $46,666

    Here, taxes are levied on  $46,666.

    Is there any Crypto Tax Free in the United States?

    Buying, holding and transferring crypto from one wallet to another is not taxable in the United States.

    Crypto Tax in United States – FAQs

    Do you have to pay tax when you buy crypto in the United States?

    No, you do not have to pay taxes when buying crypto in the US.

    Do you have to pay tax when you sell crypto in the United States?

    Yes, selling crypto is subject to capital gains tax.

    Do you have to pay tax when transferring crypto in the United States?

    No, transferring crypto is not taxable in the United States.

    Do you have to pay tax when spending crypto in the United States?

    Yes, spending crypto is subject to capital gains tax.

    Is swapping crypto taxable?

    Yes, swapping one crypto coin for another is taxable in the United States.

    How much tax on crypto gains in the US?

    Single taxpayersMarried filing jointlyHead of householdMarried filing separatelyLong-term capital gains rate (%)
    Up to 41,675Up to 83,350Up to 55,800Up to 41,6750
    41,676 to 459,75983,351 to 517,20055,801 to 488,50041,676 to 258,60015
    Over 459,750Over 517,200Over 488,500Over 258,60020

    How do I avoid capital gains tax on crypto in the US?

    Keeping crypto long term will lower the amount of taxes you pay. Also if you income is less than $41675, then you are exempt from long term capital gains tax.

    Last Updated on May 5th, 2023 at 8:52 am
    This information is derived from secondary sources on the web and is subject to change with regulations. This article must not be construed as financial advice and we advise readers to act on this information only after a professional review of their unique circumstances. Binamite is not liable for any loss arising out of the use of this information, directly or indirectly.
    Maitreyee Somvanshi

    Market Research Intern, Octaloop

    Maitreyee takes a keen interest in financial technologies and their potential to transform lives at the grassroots. Put together with her penchant for Economic Research, she brings tonnes of academic and actionable insight into our products. Maitreyee is contributing at Binamite as a Market Research Intern, and when she's not doing that, you can find her exploring the city or buried in a book.