A Beginner’s Guide to New U.S. Crypto Tax Rules

If you’ve filed a U.S. tax return recently, you might have noticed the IRS is putting crypto front and center with a question about "virtual currency" on almost every form. For newcomers to crypto, this may come as a surprise—but reporting income or capital gains from crypto transactions has always been a requirement.

While the rules for individuals haven’t changed, the IRS and Treasury Department rolled out new regulations in 2024 that significantly changed reporting requirements for institutions such as Coinbase.

Curious about what this means and how it might affect you? Let’s break it down.

Starting in 2025, the IRS is changing how digital asset transactions are reported. Until now, only brokers handling securities like stocks and bonds reported sales to the IRS using forms like 1099-B. These sales reporting requirements now also apply to crypto and crypto brokers like Coinbase.

Here’s what these changes mean for you:

• Beginning January 1, 2025: Brokers like Coinbase are required to report the gross proceeds from your crypto sales and exchanges on a new tax form called the 1099-DA. Gross proceeds refer to the total amount you received from selling or exchanging cryptocurrency, before accounting for any costs or fees. For example, if you sold Bitcoin for $1,000, that $1,000 would be your gross proceeds—even if you initially paid $900 for the Bitcoin or incurred a fee for the sale. The new 1099-DA form provides a clear record of the proceeds from your transactions, helping you calculate taxable gains or losses and simplifying the process of filing your tax returns.

• Beginning January 1, 2026: In addition to gross proceeds, brokers are also required to report the cost basis, which helps calculate your gains or losses. The cost basis is the original value of your cryptocurrency when you acquired it, plus any associated costs like fees. For example, if you purchased 1 ETH for $1,500 and paid a $50 transaction fee, your cost basis would be $1,550. By including cost basis alongside gross proceeds on the 1099-DA form, brokers help simplify the process of calculating your gains or losses. Essentially, your gain or loss is the difference between the gross proceeds and the cost basis. If you sold that 1 ETH for $2,000, your taxable gain would be $450 ($2,000 - $1,550).

The new digital asset tax regulations do not apply to decentralized or non-custodial crypto exchanges, which do not take possession of the digital asset being sold or traded.

If you’ve used apps like Robinhood or Fidelity, you’ve probably seen tax forms like 1099-B for stocks. Starting in 2025, crypto brokers like Coinbase will send you a similar form—1099-DA—to report the gross proceeds of your sales or exchanges.

Here’s what to expect:

• Beginning January 1, 2025, Coinbase will report the gross proceeds of your digital asset sales and exchanges to you on Form 1099-DA. You will receive Tax Year 2025 reporting in the beginning of 2026.

• You’ll get a copy of the form to use when filing your taxes, and the IRS will also receive a copy to ensure accurate reporting.

Coinbase will also request that you complete one of the following tax certification forms:

Information from Form W-9 is used to report your transactions properly to the IRS. If you don’t submit the correct form, your crypto sales or exchanges might be subject to backup withholding beginning January 1, 2027. This means a portion of your proceeds will be withheld and sent to the IRS. To avoid surprises, make sure your tax information is up to date and accurate by visiting Taxes and reviewing your tax status under Settings. If you’re unsure how these changes apply to you, consult a tax professional to ensure you’re prepared for these new reporting rules.

Disclaimer

Coinbase doesn't provide tax advice. Information here is provided to help customers understand their taxes, but should be reviewed before a customer uses it to file their taxes. To ensure this information works for you, please work with a professional.