Crypto Taxes in 2025: What You Need to Know

Crypto investors have not been great at paying taxes on time. A 2023 IRS review showed that only about 25% of crypto investors are likely to pay their taxes on time. But things are about to change in 2025. Starting in 2025, investors with accounts on centralized crypto exchanges will have their transactions reported to the IRS. This means that if you sold or exchanged crypto on a centralized exchange like Coinbase, the exchange will report your sales and exchanges to the IRS on Form 1099-DA. You'll also get a copy of this form by January 30, 2026, in time for you to file your 2025 tax return. This reporting does not create any new tax obligations for you. But it will make it easier for the IRS to know if you're not paying your taxes. If what you report on your return doesn't match what appears on the 1099-DA form sent to the IRS, the IRS's Automated Underreporter system may flag the discrepancy and send you a notice to correct the mismatch. But there is a silver lining. The 1099-DA form will make life easier for those who need to report on their investments. It will also increase compliance, which is good for everyone. However, there are some important exceptions to what will be on your 1099-DA form. For 2025, centralized exchanges are only required to report the gross proceeds of your crypto sales on the 1099-DA, not the cost basis. The cost basis is what you will need to calculate to determine what your capital gains and losses are. Starting in 2026, exchanges will have to start reporting cost basis. But only for securities purchased on or after January 1, 2025 and only if the purchase and subsequent sale took place on the same exchange, and the asset was held by the exchange the whole time. No transfers can occur. If you do get a 1099-DA with gross proceeds, given that it's the inaugural year of the reporting requirement, check that your crypto exchange reported it correctly. Stablecoin, NFTs, and wrapped tokens are not required to be reported on the 1099-DA. But you are still obligated to report them on your tax return. Crypto ETFs are subject to third-party reporting. But they will appear on a Form 1099-B – the same form used for any of your sales through a broker involving stocks, bonds, or derivatives. Crypto assets on decentralized exchanges are not subject to third-party reporting. But you are still obligated to report your taxable decentralized finance (DeFi) transactions on your tax return. Despite the different reporting requirements for your SEC-regulated assets like stocks versus assets on a crypto exchange, the tax treatment of your capital gains and losses are the same. Namely, that your losses can offset your gains. And if you have more losses than gains, you also may use them as a deduction for up to $3, 000 of your ordinary income in any given tax year. Any losses in excess of all that may be carried forward to apply to gains in future tax years. It's important to know that you can use your losses in one asset class (e. g. , stocks) to offset your gains in another (e. g. , crypto).