Two Major Crypto Tax Updates for 2026: IRS Rules That Will Change Everything
Two Major Crypto Tax Updates for 2026: IRS Rules That Will Change Everything
Are you ready for <2 Cryptocurrency Tax Rule Changes Going Into Effect in 2026>? The IRS is making big moves to track crypto trades more closely. These updates will affect how you report gains and losses on your taxes. If you buy, sell, or trade Bitcoin, Ethereum, or any digital asset, you need to know these changes now.
Crypto taxes have come a long way. In the early days, there were no clear rules. But things changed fast. Back in 2014, the IRS said all cryptocurrencies are property, not money. This made every sale, trade, or spend a taxable event. Fast forward to 2019, and the IRS added a yes/no question about crypto on Form 1040. They also started audits and required exchanges to send 1099 forms.
Now, as we approach the 2026 tax season (for 2025 trades), two new rules will make reporting even stricter. Let’s break them down step by step.
What is the First Big Change? The New 1099-DA Form
Starting with the 2025 tax year, all “crypto brokers” must send you a Form 1099-DA. This includes big centralized exchanges like Coinbase and even some decentralized platforms that act like brokers.
What does 1099-DA report?
- Your cost basis (what you paid for the crypto).
- Dates of sales, trades, or disposals.
- Proceeds from those transactions.
This form works like the 1099-B for stocks. It gives the IRS exact details for capital gains taxes. No more guessing or simple totals. Every trade gets tracked.
Why does this matter? It standardizes crypto like traditional investments. Casual traders who played tax games might step back. But for serious investors, this brings clarity and trust. Big institutions and conservative buyers will like it more.
The Second Change: Track Cost Basis Per Wallet and Exchange
Here’s where it gets tricky. You can no longer lump all your Bitcoin holdings together from different places. If you bought BTC on Coinbase, Robinhood, and a personal wallet, each spot needs its own cost basis tracking.
Example:
- Bought 1 BTC on Coinbase for $50,000.
- Bought 1 BTC on Robinhood for $60,000.
- Sell 1 BTC for $70,000.
Before, you might average the cost at $55,000 and report $15,000 gain. Now, you pick which lot (FIFO, LIFO, or specific ID) from which platform. The 1099-DA helps, but you must match them correctly.
This stops people from cherry-picking low costs to lower taxes. It matches stock rules but adds work for multi-platform users.
How These <2 Cryptocurrency Tax Rule Changes> Affect You
These rules show crypto is here to stay. The IRS treats it like real assets, not a passing trend. But frustration is real for everyday holders.
Pros:
- Clearer reporting reduces audit risks.
- Attracts more big money.
- ETFs become easier alternatives.
Cons:
- More paperwork and tracking.
- DeFi users might face new broker definitions.
- Higher compliance costs for small traders.
Cost Basis Basics: Quick Guide
Not sure what cost basis means? It’s your original purchase price plus fees. When you sell, gain = sale price – cost basis.
| Method | How It Works | Best For |
|---|---|---|
| FIFO (First In, First Out) | Sells oldest buys first. | Rising markets. |
| LIFO (Last In, First Out) | Sells newest buys first. | Falling markets. |
| Specific ID | Pick exact lots. | Tax optimization. |
With per-wallet rules, choose wisely and keep records.
Tips to Prepare for 2026 Crypto Taxes
- Use tracking tools: Apps like Koinly, CoinTracker, or ZenLedger connect to exchanges and calculate basis automatically.
- Keep records: Save every trade receipt, wallet transaction, and fee.
- Check broker status: Watch for IRS lists of who must file 1099-DA.
- File early: Test your setup in 2025.
- Get help: Talk to a crypto-savvy accountant.
Smart Alternatives: Skip the Hassle with Crypto ETFs
Don’t want wallet-by-wallet tracking? Buy crypto ETFs. They trade like stocks on NYSE. Spot Bitcoin and Ethereum ETFs are live now, with more coming.
Benefits:
- Standard 1099-B forms.
- No self-custody worries.
- Easy in retirement accounts.
Perfect for hands-off exposure to crypto growth.
What’s Next for Crypto Taxes?
Momentum is building. Congress might add more rules. DeFi lending or NFTs could get hit next. Stay informed via IRS.gov or crypto news.
These <2 Cryptocurrency Tax Rule Changes Going Into Effect in 2026> are a sign of maturity. Embrace them to invest smarter and avoid penalties.
FAQ: Crypto Tax Changes 2026
Q: When do these rules start?
A: For trades in 2025, filed in 2026.
Q: Do wallets need 1099-DA?
A: Only if they act as brokers. Self-custody wallets? You report manually.
Q: What if I ignore it?
A: Big fines, audits, and back taxes.
Plan ahead. Your future self will thank you.
