Is buying crypto with USD taxable in the US?

No. Buying cryptocurrency with US dollars is not a taxable event. You don't recognize any gain or loss when you purchase. The total amount you pay (including fees) becomes your cost basis, which you'll use later to calculate gains or losses when you dispose of the asset.

Are crypto-to-crypto trades taxable even if I never cash out to dollars?

Yes. Swapping one crypto for another (for example, BTC → ETH or ETH → USDC) is a taxable disposal of the crypto you gave up. You must calculate gain or loss using the fair market value of the crypto you received at the time of the trade, even if no dollars are involved.

Are transfers between my own wallets taxable under the 2025 per-wallet rules?

Moving crypto between wallets or exchange accounts you own is still non-taxable. Your original cost basis carries over to the receiving wallet. However, under the 2025 per-wallet rules, each wallet is a separate cost basis ledger, so you must document transfers carefully. Network fees paid in crypto for the transfer may be taxable disposals of the fee amount.

Is receiving crypto as a gift taxable?

For the recipient, receiving a bona fide crypto gift is not taxable. You only recognize tax when you later sell, trade, or otherwise dispose of the gifted crypto. Your cost basis is usually the donor's basis (with special rules if the fair market value at the time of the gift is below the donor's basis). The giver may have gift tax or capital gains considerations if the asset has appreciated.

Do I pay tax when I donate crypto to a charity?

Donating appreciated crypto directly to a qualified 501(c)(3) charity is not a taxable disposal. You avoid capital gains tax on the appreciation and may be able to claim a charitable deduction for the fair market value of the donated crypto, subject to normal charitable deduction rules. The special OBBBA above-the-line deduction applies to cash gifts, not to crypto.

Are airdrops, staking rewards, and DeFi yield taxable?

Generally yes. Airdrops, staking rewards, mining income, and DeFi interest or yield are typically treated as ordinary income when you gain dominion and control over the tokens. The fair market value at that time is taxable income and also becomes your cost basis for future disposals.

Non-taxable crypto transactions in the US: what the IRS does and doesn't tax

Not every crypto transaction triggers a tax bill. Understanding which activities are non-taxable can help you avoid unnecessary reporting headaches and plan your crypto strategy more effectively.

However, many investors are caught off guard by transactions they assumed were tax-free but are actually taxable. This guide clearly separates the two, with references to the latest IRS guidance including the new per-wallet cost basis rules that took effect in 2025.

Non-taxable crypto transactions

The following activities do not create a taxable event under current IRS guidance.

Buying crypto with US dollars

Purchasing cryptocurrency with fiat currency (USD) is not a taxable event. No gain or loss is recognized at the time of purchase. However, the amount you pay — including any exchange fees — becomes your cost basis, which you will need when you eventually dispose of the asset.

You should record the date, amount, price, and any fees for every purchase, as this information is essential for calculating gains later.

Holding crypto (HODLing)

Simply owning cryptocurrency generates no taxable income, regardless of how much the value increases or decreases. Tax is only triggered when you dispose of the asset — by selling, trading, spending, or gifting it.

This means unrealized gains (paper profits) are not taxable. You only owe tax when you realize the gain through a disposal.

Transferring crypto between your own wallets

Moving crypto from one wallet or exchange account you own to another wallet or account you also own is not a taxable event. The IRS confirmed this in their digital asset FAQs.

However, there are important nuances under the new per-wallet cost basis rules:

Cost basis carries over: When you transfer crypto between your own wallets, the original cost basis travels with the asset to the receiving wallet.
Transfer fees may be taxable: The IRS notes that a transfer is non-taxable "except to the extent of any digital assets you use to pay for transaction services." If you pay a network fee in crypto (e.g., ETH gas fees), that fee payment may itself be a small taxable disposal.
Record-keeping is critical: Under the per-wallet rules effective January 1, 2025, each wallet is tracked as a separate ledger. Failing to document transfers can break cost basis continuity, and the IRS may treat a sale as having zero cost basis if you cannot prove the chain of custody.

Receiving crypto as a gift

Receiving cryptocurrency as a bona fide gift is not a taxable event for the recipient. You do not recognize income when you receive the gift — only when you later sell, exchange, or dispose of it.

Your cost basis in the gifted crypto depends on the fair market value (FMV) at the time of the gift:

If the FMV is greater than or equal to the donor's basis: Your basis is the donor's original basis (a "carryover basis").
If the FMV is less than the donor's basis: Special rules apply — your basis for calculating a gain is the donor's basis, but your basis for calculating a loss is the FMV at the time of the gift.

For the person giving the gift, it may be a taxable disposal if the crypto has appreciated in value. The annual gift tax exclusion for 2025 and 2026 is $19,000 per recipient.

Donating crypto to a qualified charity

Donating appreciated cryptocurrency to a qualified 501(c)(3) charitable organization is not a taxable disposal. You avoid capital gains tax on the appreciation entirely and may also claim a charitable deduction for the fair market value of the donated asset.

Under the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, non-itemizers can now also claim a charitable deduction for cash contributions (up to $1,000 single / $2,000 MFJ), though this applies to cash, not property donations like crypto.

Soft forks

A soft fork — a protocol upgrade that is backward-compatible and does not create a new cryptocurrency — does not result in taxable income. Since you do not receive any new assets, there is nothing to report.

Transactions that are commonly mistaken as non-taxable

These are frequently misunderstood. Each of the following is a taxable event.

Crypto-to-crypto trades

Swapping one cryptocurrency for another — for example, trading BTC for ETH — is a taxable disposal of the first asset. You must calculate the gain or loss based on the fair market value of the crypto you received at the time of the trade.

This applies even if you never "cash out" to dollars. Every crypto-to-crypto swap is a taxable event.

Trading into stablecoins

Selling crypto for a stablecoin like USDT or USDC is taxable. Stablecoins are treated as digital assets, not as dollars. The trade is a disposal of the original crypto, triggering a capital gain or loss.

Many investors use stablecoins to "lock in profits" without returning to fiat, but the IRS treats this identically to selling for cash.

Spending crypto on goods or services

Using cryptocurrency to buy a product or pay for a service is a taxable disposal. The IRS treats this as if you sold the crypto for its fair market value and then used the proceeds to make the purchase.

This means even buying a coffee with Bitcoin can trigger a capital gain or loss.

Receiving crypto as payment for work

If you receive cryptocurrency as compensation for services — whether as an employee or freelancer — the fair market value at the time you receive it is taxable as ordinary income. This is true regardless of whether you convert it to dollars.

Hard forks that result in new tokens

Unlike soft forks, a hard fork that results in you receiving a new cryptocurrency is a taxable event. The fair market value of the new tokens at the time you gain "dominion and control" over them is taxable as ordinary income.

Receiving mining or staking rewards

Crypto earned through mining or staking is taxable as ordinary income at the fair market value when received. This applies whether you mine as a hobby or a business, and whether you stake through a proof-of-stake protocol or a DeFi platform.

Airdrops

Receiving airdropped tokens is taxable as ordinary income at the fair market value when you gain dominion and control over them. If the airdrop has no value at the time of receipt, it may not be taxable until disposed of — but this is a gray area and conservative reporting is recommended.

Earning interest or rewards from DeFi

Interest, yield farming rewards, and liquidity pool earnings are generally taxable as ordinary income when received. The fair market value at the time of receipt determines your income, and this value also becomes your cost basis for future disposals.

The per-wallet rules and non-taxable transfers

The 2025 per-wallet cost basis rules have an important interaction with non-taxable transfers. While transferring between your own wallets remains non-taxable, you must now meticulously document these transfers because:

Each wallet is a separate cost basis ledger
The cost basis of transferred units must be properly moved from the sending wallet to the receiving wallet