How to Owe Less Tax on Crypto Gains

Cryptocurrency is a digital asset, so when taxes are owed, they are either ordinary income or capital gains

account_circle Rate My Tax Accountant calendar_month November 4, 2023 (edited June 27, 2026)

When Cryptocurrency is Not Taxed

  • Buying and holding - buying or investing in cryptocurrencies without exchanging or selling them
  • Transferring between wallets
  • Receiving crypto as a gift


When Cryptocurrency is Taxed

  • Getting paid wages/salary in crypto currency (Ordinary Income)
  • Selling for a profit less than 1 year after purchase of cryptocurrency (Ordinary Income)
  • Selling for a profit 1 year or more after purchase of cryptocurrency (Capital Gain)
  • Mining or Staking (Ordinary Income)
  • Trading one Cryptocurrency for another


A general rule of thumb is, if you hold your assets for a year or more, they are subject to a lower tax rate, depending on your current bracket (Capital Gains).

Losses can be claimed to a certain limit, depending on filing status.

Disclaimer: This article is for informational purposes only and is not meant to be financial or legal advice.

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