The IRS treats cryptocurrency as property, not currency, which means selling, trading, or even spending crypto can trigger a taxable event. Our crypto tax calculator estimates what you owe based on your purchase price, sale price, and how long you held the asset, since short-term and long-term holdings are taxed at very different rates.
Holding period is the single biggest factor here — assets held for a year or less are taxed as ordinary income at your regular tax bracket, while assets held longer than a year qualify for the lower long-term capital gains rate. This distinction alone can mean a significantly different tax bill for the exact same gain, depending only on timing.
Crypto gains follow the same underlying tax structure as other investment gains — our capital gains tax calculator covers this in more general terms, and our income tax calculator can help you see how crypto gains affect your total tax liability for the year.