--- title: "Crypto Tax Rates by Income Bracket: Short vs Long-Term" date: 2026-06-29 author: "Barry Elad" featured_image: "https://coinlaw.io/wp-content/uploads/2026/06/crypto-tax-rates-by-income-bracket-short-vs-long-term.jpg" categories: - name: "Cryptocurrency" url: "/crypto.md" tags: - name: "Insights" url: "/tag/insights.md" --- # Crypto Tax Rates by Income Bracket: Short vs Long-Term A long-term crypto gain is taxed at **0%**, **15%**, or **20%** at the federal level. A short-term gain is taxed at ordinary income rates that reach **37%**. The IRS treats cryptocurrency as property rather than currency, which is why the rate depends on the holding period and income. **Two questions decide the rate:** Holding period and taxable income. Stacking the top 20% long-term rate from IRS Topic 409 with the separate 3.8% net investment income tax from IRS Topic 559 puts a high earner above both thresholds. This NIIT layer applies above the MAGI lines the IRS sets, so the effective rate reaches **23.8%** on a long-term gain. The one-year Holding-period line alone swings an identical gain by the gap between the 37% short-term and 20% long-term rates. That gap is **17 percentage points**, according to IRS Topic 409. ## Key Takeaways - A crypto gain held for one year or less is short-term and taxed as ordinary income; held for more than one year, it becomes long-term. - Long-term crypto gains carry a federal rate of **0%**, **15%**, or **20%**, set by your taxable income and filing status. - Short-term crypto gains follow the ordinary income brackets, which top out at **37%** for tax year 2025. - A separate **3.8%** net investment income tax applies once modified adjusted gross income passes **$200,000** (single) or **$250,000** (married filing jointly). - The highest combined federal rate on a long-term crypto gain reaches **23.8%** (20% plus the 3.8% add-on). - The IRS classifies digital assets as property under Notice 2014-21, so general capital-gain rules drive every rate above. ## Crypto Is Taxed as Property, Not Currency [Cryptocurrency](https://coinlaw.io/how-crypto-is-taxed/) is taxed as property for US federal purposes, according to IRS Digital Assets guidance. For U.S. tax purposes, digital assets are considered property, not currency, and the general tax principles applicable to property transactions are outlined in Notice 2014-21 and subsequent guidance. That single classification is why no flat “crypto tax rate” exists. The rate you pay depends on the same factors that govern stocks and real estate: your holding period, your income, and your filing status. According to IRS guidance, the rate split starts at the disposal. When you sell or dispose of a digital asset held as a capital asset, the income is taxed as a capital gain or loss. A short-term capital gain applies if you held the digital asset for one year or less before selling, exchanging, or otherwise disposing of it, and a long-term capital gain applies if you held it for more than one year. The holding period runs until you sell, exchange, or otherwise dispose of the digital asset. ### What Counts as a Taxable Disposal A disposal is broader than a cash sale. The IRS guidance treats selling, exchanging, or otherwise disposing of a digital asset as a capital event, which in practice covers three common situations: - Selling a coin for US dollars or another fiat currency. - Exchanging one digital asset for another. - Spending crypto to pay for goods or services. Your taxable gain on a disposal is the difference between what you receive and what you paid in. Your gain or loss is the difference between the fair market value of the property you received and your adjusted basis in the digital asset you exchanged or disposed of. Receiving crypto is treated differently from selling it. If you receive digital assets as payment for property or services, or as a reward, award, or payment for services, you must include the fair market value of the digital assets received as ordinary income. That split matters for anyone earning staking or mining rewards: the receipt is ordinary income at fair market value, and a later sale is a separate capital event measured from that value. Property treatment, according to IRS guidance, is the reason the rate hinges on one question: how long you held the asset before the disposal. ## Short-Term Crypto Gains Are Taxed as Ordinary Income A crypto gain held for one year or less is short-term and taxed as ordinary income at graduated rates, per IRS Topic 409. For tax year 2025, those graduated rates run from **10%** to **37%**. That ordinary schedule, set each year by IRS inflation adjustments, is the same one that applies to wages. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes higher than **$626,350** ($751,600 for married couples filing jointly). Lower bands carry the rest of the schedule, per IRS Revenue Procedure 2024-40. The lowest rate is **10%** for single individuals with incomes of **$11,925** or less, and the **12%** rate applies for incomes **over $11,925** ($23,850 for married couples filing jointly). The standard deduction for single taxpayers rises to $15,000 for 2025, and for married couples filing jointly, it rises to **$30,000**. The standard deduction reduces taxable income before the bracket lookup runs. Because a short-term gain stacks on wages, the [step-by-step crypto tax reporting guide](https://coinlaw.io/how-to-report-crypto-taxes/) walks through how the gain lands on the return. ### Ordinary Income Brackets That Apply to Short-Term Crypto Tax year 2025 rateSingle (taxable income over)Married filing jointly (over)10%$0$012%$11,925$23,85022%$48,475$96,95024%$103,350$206,70032%$197,300$394,60035%$250,525$501,05037%$626,350$751,600*Source: IRS, Revenue Procedure 2024-40* The **22%** bracket starts at incomes over **$48,475** for single filers ($96,950 for married couples filing jointly), and the **35%** bracket starts at **$250,525** ($501,050 for joint filers) in 2025. Hold past one year, and a different, lower rate schedule takes over. ## Long-Term Crypto Capital Gains Tax Rates (0%, 15%, 20%) A long-term crypto gain is taxed at 0%, 15%, or 20% federally, set by taxable income, under the IRS Topic 409 capital gains rates. The tax rate on most net capital gain is no higher than **15%** for most individuals. The zero-rate band reaches further than many holders expect. A capital gains rate of 0% applies if your taxable income is less than or equal to **$48,350** for single filers and **$96,700** for married filing jointly, and the 15% rate applies for income more than **$48,350** for single filers. The dated table below sets out these inflation-adjusted lines by filing status. The **15%** rate applies above the **0%** thresholds, and the **20%** rate applies to the extent taxable income exceeds the thresholds set for the **15%** rate. The **15%** capital gains rate applies to single filers with taxable income more than **$48,350** but less than or equal to **$533,400**, and for married filing jointly, more than **$96,700** but less than or equal to **$600,050**. A capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% rate. One niche carve-out applies to certain coins. Net capital gains from selling collectibles such as coins or art are taxed at a maximum **28%** rate. ### 2025 Long-Term Rate Thresholds by Filing Status Tax year 2025 long-term rateSingle (taxable income)Married filing jointlyHead of household0%up to $48,350up to $96,700up to $64,75015%$48,350 to $533,400$96,700 to $600,050$64,750 to $566,70020%over $533,400over $600,050over $566,700*Source: IRS Topic 409, Revenue Procedure 2024-40* > **By the numbers:** IRS Topic 409 sets the 2025 long-term 0% ceiling at **$48,350** for single filers and **$96,700** for married couples filing jointly, the 15% rate runs to **$533,400** single and **$600,050** joint, and only income beyond those points meets the **20%** rate. The **0%** rate applies for head of household up to **$64,750**, the **15%** rate applies for more than **$64,750** but less than or equal to **$566,700**, and the **20%** rate applies above that. Filing status moves every one of those dollar lines. ## Crypto Tax Rates by Filing Status Filing status sets where each bracket line falls, so the same long-term crypto gain can be taxed at different rates for two people with identical income. The long-term 0% rate applies for taxable income less than or equal to **$96,700** for married filing jointly and less than or equal to **$48,350** for single filers, with the 15% rate for income more than those lines, per IRS Topic 409. The 15% rate applies to married filing separately taxpayers with taxable income more than $48,350 but less than or equal to $300,000. Standard deductions widen the gap further because they shrink taxable income before the bracket lookup runs. For tax year 2025, the standard deduction is **$15,000** for single filers, **$30,000** for married couples filing jointly, and **$22,500** for heads of households. A married couple, therefore, shields twice the income a single filer does before the first dollar of crypto gain is rate-tested. ### Single, Married Filing Jointly, and Head of Household Compared For a long-term holder, filing status can be the difference between a 0% and a 15% rate on the same sale. The 0% rate applies if taxable income is less than or equal to $96,700 for married filing jointly, and the 15% rate applies for married filing jointly income more than $96,700. A joint filer can therefore realize close to twice the long-term gain at the 0% rate that a single filer can before crossing into the 15% band. > **Worth noting:** IRS Topic 409 sets the long-term 0% ceiling at **$96,700** for married couples filing jointly versus **$48,350** for single filers, so two people with identical income and an identical coin can land on opposite sides of the 0%/15% line purely on filing status. In our reporting on retail tax topics, filing status is the variable that holders most often overlook when they estimate a rate from a single headline percentage. High earners hit one more federal layer; the brackets do not show. ## The 3.8% Net Investment Income Tax on Crypto Gains A **3.8%** net investment income tax (NIIT) applies to individuals, estates, and trusts that have net investment income above applicable threshold amounts. Net investment income generally includes net gains from the disposition of property, such as stocks, bonds, [mutual funds](https://coinlaw.io/mutual-fund-industry-statistics/), and real estate. Because the IRS treats digital assets as property and net investment income includes net gains from the disposition of property, a 3.8% net investment income tax can apply to a crypto gain once income clears the threshold. The thresholds are fixed by statute, not indexed to [inflation](https://coinlaw.io/inflation-statistics/). The NIIT threshold amounts are **$250,000** for married filing jointly or qualifying surviving spouse, **$125,000** for married filing separately, and **$200,000** for single or head of household. A single filer above $200,000 in modified adjusted gross income who sells a long-term crypto position therefore pays the 20% rate plus 3.8% on the investment income over the line. ### How NIIT Stacks on the Capital Gains Rate The two layers add together for taxpayers above both thresholds. The top long-term capital gains rate of **20%** from IRS Topic 409 combines with the **3.8%** NIIT from IRS Topic 559 on a long-term crypto gain. That sum is a **23.8%** top combined federal rate, a figure no single IRS bracket table shows. Tax year 2025 layer by Rate RATE · Rate (%) · Source: IRS Topic 409, IRS Topic 559 RATE · COINLAW ANALYSIS Tax year 2025 layer by Rate Rate (%) IRS Topic Long-term capital gains (top) 20% Net investment income tax 3.8% Combined top federal rate 23.8% 0 5 10 15 20 25 SOURCE IRS Topic 409, IRS Topic 559 > **Why it matters:** A single filer above both lines pays the **20%** long-term rate from IRS Topic 409 and the **3.8%** net investment income tax from IRS Topic 559, for a **23.8%** combined federal rate on a long-term crypto gain. No bracket table shows that figure on its own, because the two layers live on separate IRS pages. Stacking the layers shows the real gap between holding for eleven months and thirteen. ## Short-Term vs Long-Term: The Holding-Period Cliff The same crypto gain produces two very different bills depending on the one-year line. At the top of the schedule, a short-term crypto gain is taxed at the **37%** ordinary rate from the 2025 brackets. The same gain held long-term is taxed at the **20%** rate from IRS Topic 409. The top short-term rate of 37% from the 2025 ordinary brackets minus the top long-term rate of 20% from IRS Topic 409 is a 17-percentage-point difference on an identical gain. The line itself is fixed: a holding period of one year or less is short-term, and more than one year is long-term. That gap is not abstract. On a large gain, the dollar difference can run into five figures from a single extra day of holding. ### A Worked Example on a $50,000 Crypto Gain For a hypothetical **$50,000** long-term crypto gain, the dollar cost swings sharply with the holder’s bracket. A top-bracket holder pays roughly **$18,500** if the **$50,000** gain is taxed short-term at the top **37%** rate versus **$10,000** at the top **20%** long-term rate, an **$8,500** difference; a middle-income holder near the **22%** ordinary line pays about **$11,000** short-term versus **$7,500** at the **15%** long-term rate. These figures apply the published 2025 marginal rates to an illustrative gain. $50,000 gain, tax year 2025Short-term rateShort-term taxLong-term rateLong-term taxLower-income holder12%$6,0000%$0Middle-income holder22%$11,00015%$7,500Top-bracket holder37%$18,50020%$10,000*Source: IRS Topic 409, IRS, Revenue Procedure 2024-40 (illustrative marginal-rate application)* The lower-income row is the most striking: the identical **$50,000** gain costs **$6,000** if sold inside a year and nothing if held past the one-year mark, because the long-term **0%** band covers it. Software that tracks holding periods automatically can flag these lines before a sale; see our roundup of the best crypto tax software for how those tools handle lot selection. The brackets that drive this table shift each year, so next year’s lines land differently. ## Crypto Tax Brackets (Forward-Looking) For tax year 2026, the ordinary brackets rose with inflation, lifting the income needed to reach each rate. For tax year 2026, the top tax rate remains 37% for individual single taxpayers with incomes higher than **$640,600** ($768,700 for married couples filing jointly). The lower bands moved up in step. The 22% rate starts at incomes over **$50,400** for single filers ($100,800 for married couples filing jointly), and the 10% rate covers incomes of $12,400 or less ($24,800 for joint filers) in 2026. Standard deductions also climbed for the year. For tax year 2026 the standard deduction rises to **$16,100** for single taxpayers, **$32,200** for married couples filing jointly, and $24,150 for heads of households. The rate percentages did not change, only the income lines, so a short-term crypto gain that landed in the 24% band on 2025 income may sit in the 22% band on the same 2026 income. ### 2026 Ordinary Brackets vs the 2025 Lines Rate by 2025 single (over) 2025 SINGLE (OVER) · 2025 single (over) vs 2026 single (over) (USD) · Source: IRS tax-year-2025 and tax-year-2026 inflation releases 2025 SINGLE (OVER) · COINLAW ANALYSIS Rate by 2025 single (over) 2025 single (over) vs 2026 single (over) (USD) IRS · 2025 2025 single (over) 2026 single (over) 800000 640000 480000 320000 160000 0 22% 24% 32% 37% SOURCE IRS tax-year-2025 and tax-year-2026 inflation releases The **32%** rate begins at incomes over **$201,775** for single filers in 2026 ($403,550 for married couples filing jointly). Crypto regulation and reporting rules continue to evolve alongside these figures, as tracked in our [SEC and CFTC crypto regulation data](https://coinlaw.io/sec-and-cftc-regulations-on-cryptocurrencies-statistics/). ## What Is the Tax Rate on Crypto Held Less Than a Year? Crypto held for one year or less is taxed as ordinary income at your marginal bracket, according to IRS Topic 409. Those marginal rates run from **10%** to **37%** for the tax year 2025. The exact percentage depends on your total taxable income and filing status, because a short-term crypto gain stacks on your wages and other income for the year rather than getting its own preferential schedule. ## Does the 3.8% Net Investment Income Tax Apply to Crypto? Yes. Because the IRS treats digital assets as property and net investment income includes net gains from the disposition of property, the 3.8% net investment income tax can apply to a crypto gain once your income clears the threshold. Net investment income generally includes net gains from the disposition of property, and the **3.8%** NIIT applies above **$200,000** for single filers and **$250,000** for married filing jointly. Since crypto is treated as property, a coin sale that produces a gain is investment income for this purpose, and the 3.8% sits alongside whatever capital gains rate already applies. ## Conclusion A crypto holder’s federal rate spans a wide range, set by holding period, income, and filing status. A long-term gain meets the **0%**, **15%**, or **20%** schedule. A short-term gain meets ordinary rates up to **37%**. High earners above the threshold add the **3.8%** net investment income tax. The one-year holding line can move an identical gain by the full gap between the top short-term and top long-term rates. Every dollar figure here is dated to its tax year, because the bracket lines move with inflation each year while the rate percentages hold steady. State crypto tax is separate and varies widely, so the federal rate is only part of the bill. Anyone preparing to sell or swap crypto should confirm their specific situation with a licensed tax professional before filing. Definition of Staking. Link to full glossary entry follows the description.**Staking**Staking is the process of locking cryptocurrency in a proof-of-stake network to help validate transactions and earn rewards, replacing energy-intensive mining. [Read more](https://coinlaw.io/glossary/staking/)