Get Ready for 2 Major Crypto Tax Changes in 2026: IRS Rules Explained
Get Ready for <2 Major Crypto Tax Changes> in 2026: IRS Rules Explained
Cryptocurrency investing has exploded in popularity, but so have the tax rules. If you hold Bitcoin, Ethereum, or any digital asset, big changes are coming for your 2025 taxes, which you’ll file in 2026. The IRS is making it harder to ignore crypto taxes. These updates aim to make reporting clearer and catch more details on your trades.
In this post, we’ll break down the two major crypto tax changes for 2026, explain what they mean for you, and share tips to stay compliant. Whether you’re a beginner or seasoned trader, understanding these rules now can save you headaches – and penalties – later.
A Quick History of Crypto Taxes
Back in the early days of crypto, taxes were a gray area. No one knew if Bitcoin was money or something else. That changed in March 2014 when the IRS released Notice 2014-21. It ruled that all cryptocurrencies are property, not currency. This made every sale, trade, or spend a taxable event, just like selling stocks.
- Selling crypto for USD? Taxable.
- Trading BTC for ETH? Taxable.
- Buying coffee with crypto? Taxable.
Fast forward to 2019: The IRS added a simple yes/no question about crypto to Form 1040. They also ramped up audits and pushed big exchanges like Coinbase to send 1099 forms. Now, with 2026 approaching, two new rules will change how you track and report crypto gains.
Change #1: The New 1099-DA Form from Crypto Brokers
Starting with the 2025 tax year (filed in 2026), all “crypto brokers” must send you a Form 1099-DA. This is like the 1099-B for stocks but built for digital assets.
What is a crypto broker? It includes centralized exchanges (CEXs) like Coinbase, Binance.US, Kraken, and Gemini. Some decentralized platforms (DEXs) that custody your funds might qualify too. Self-custody wallets like MetaMask? Probably not brokers – you’ll still self-report.
What does 1099-DA report?
- Date of each sale, trade, or disposal.
- Cost basis (what you paid).
- Proceeds (what you got).
- Gains or losses.
This standardizes crypto reporting like traditional stocks. No more guessing your basis – the form gives a clear baseline for capital gains taxes. Short-term gains (under 1 year) are taxed as ordinary income (up to 37%). Long-term (over 1 year) get lower rates (0-20%).
Pros: Easier for honest investors. Brings clarity, which could attract big institutions tired of tax uncertainty.
Cons: Casual traders might hate the paperwork. Tax-loss harvesting across platforms gets trickier.
Change #2: Separate Cost Basis Tracking Across Wallets and Exchanges
The second big shift? You can no longer lump all your Bitcoin holdings together, even if bought on different platforms. Each wallet or exchange gets its own cost basis tracking.
Example: Say you bought 1 BTC on Coinbase for $50,000 and 1 BTC on Robinhood for $60,000. Previously, you might average them to $55,000 per BTC. Now:
- Coinbase BTC: Basis $50,000.
- Robinhood BTC: Basis $60,000.
The 1099-DA from each broker will show this separately. If you move crypto between wallets (e.g., Coinbase to Ledger), that transfer might trigger reporting too.
Why this matters: It ends “tax arbitrage” tricks where traders mixed low-basis and high-basis coins. You’ll use methods like FIFO (first in, first out), LIFO (last in, first out), or specific ID – but per platform.
This applies to all digital assets: BTC, ETH, altcoins, even NFTs in some cases.
How These <2 Major Crypto Tax Changes> Impact You
These rules signal crypto is here to stay. The IRS treats it like real property, not a passing fad. Expect more audits if your forms don’t match broker reports.
For day traders: More record-keeping. Use software like Koinly, CoinTracker, or ZenLedger to import data from all platforms.
For HODLers: Less worry if you rarely sell. But track basis from day one.
DeFi users: DEX trades and staking rewards? Many aren’t “brokers” yet, so self-report. But new rules might expand broker definitions.
Tips to Prepare for 2026 Crypto Taxes
- Track everything now. Export CSV files monthly from exchanges.
- Choose your cost basis method early. Stick to one per asset/platform.
- Use tax software. It handles multi-wallet imports and calculates gains.
- Harvest losses before year-end. Sell losers to offset winners.
- Keep records for 3-7 years. IRS can audit back that far.
Pro tip: If you trade NFTs or DeFi, classify airdrops/staking as income at fair market value on receipt day.
Skip the Hassle: Invest in Crypto ETFs
Don’t want wallet-by-wallet tracking? Buy crypto exposure through ETFs. These trade like stocks on NYSE:
- Spot Bitcoin ETFs (e.g., IBIT, FBTC).
- Spot Ethereum ETFs (e.g., ETHA).
- Solana and others coming soon.
ETFs send standard 1099-B forms. No separate basis worries – treat like any stock. Perfect for retirement accounts (IRAs) too.
Final Thoughts: Embrace the Clarity
The <2 major crypto tax changes> in 2026 might feel like extra work, but they legitimize the space. Clear rules draw more money from Wall Street. Stay compliant, use tools, and consider ETFs for simplicity.
Mark your calendar for 2026 tax season. Questions? Drop them in the comments. Happy investing!
Keywords: crypto tax changes 2026, IRS 1099-DA, cryptocurrency cost basis, bitcoin tax rules
