The IRS has drastically changed how it taxes cryptocurrency, and starting in 2025, there will be a significant change in what individuals, traders, and businesses must report regarding their activities involving digital assets. The goal of the IRS is to gain control over a growing and diverse area of taxation, and now there are new forms, rules for cost basis and multiple realizations of taxable events.
Here, we will give you our version of “Crypto Taxes: What the IRS Wants You to Report” for the 2025 tax season and beyond.
New IRS rules for 2025: What’s changed?
Starting January 1, 2025, the IRS requires all United States crypto brokers, including exchanges, payment processing, and hosted wallets, to issue a Form 1099-DA for every transaction regarding digital assets. According to First Citizens Wealth, this moves towards standardized reporting, where all sales, trades, and exchanges, are tracked and reported to taxpayers and the IRS.
The Form 1099-DA will provide gross proceeds from the sale or exchange of each digital asset, types of transactions and dates of each transaction, account identifiers, and fair market value of the asset on the day of taking each trade. The goal of the IRS’s rules is to pursue undocumented gains (or losses) from crypto brokers and to provide help to users aggregating their activity across multiple wallets or sites.
As of 2026, brokers will also report your cost basis (which is the original purchase value plus fees) to you, which lodges the responsibility onto the investor to track transfer histories and activities between wallets.
What the IRS wants you to report
If you are a trader, miner, NFT artists, or just someone who dabbles in crypto, the IRS considers cryptocurrency to be “property” for taxation purposes, which means every sale, trade, transfer, and/or earnings could be subject to tax. Here is the information we have regarding their expectations.
1. Capital gains and losses
You must report all sales, trades, exchanges, or conversions of your crypto to fiat or other coins. This would include purchases made with crypto or swapping one coin for another.
If you sell a coin for more than you originally paid for it, the gain is taxed, and a loss is also considered in your calculations, and those losses can be offset against other gains or up to $3,000 of regular income per year.
Forms: You will be using Form 1040 (Schedule D), Form 8949, and now with the broker provided Form 1099-DA.
2. Crypto income
You must report earnings from mining, staking, airdrops, NFT royalties, payments for work, yield farming, or any other situation where you have earned income in digital assets. Regardless of whether you received cash, if you were paid in a digital entity, you have earned income and you owe taxes or report it regardless of what happens with that crypto later. The IRS will consider the transaction as an income realization, and you may have gains taxes later when the assets are disposed of.
Forms to use: You will be using Form 1040 (Income) accompanied by or not accompanied by W-2, 1099-NEC, or 1099-MISC forms.
3. Transfers and gifts
You are allowed to transfer your crypto to other wallets without triggering any taxation, but you will still want to keep detailed records of your cost basis now on a wallet-by-wallet basis to comply with the IRS requests. Transferring gifts where the total exceeds $17,000 will need to be reported in 2025. Transfers of crypto to charities will also need to be itemized with the fair market value of the crypto.
4. NFT transactions
Selling or trading NFTs will be reported to you and to the IRS as taxable, as well as the number of NFTs traded with Form 1099-DA in all “first sales” and “resales” scenarios, they will need to know the total gross proceeds and the type of “cost” information.
What brokers and exchanges must do
Brokers must now send Form 1099-DA to both users and the IRS, or both. This Form must declare the gross proceeds of each sale executed on the Broker’s platform. You may continue to self-compute your cost basis for 2025, however starting in 2026, Brokers will begin reporting your cost basis along with proceeds. Every US Taxpayer who engages in transactions on a major Exchange (Coinbase, Kraken, Robinhood, etc.) will receive this Form for your 2025 reporting in early 2026.
Non-custodial platforms and DeFi are not subject to these new rules, just yet.
Taxing crypto for 2025 requires transparency, vigilance, and accurate recordkeeping. With these new IRS reporting forms and brokers providing the data, it has never been easier to be on top of what you owe and to avoid very expensive mistakes.