Short-term vs. long-term: the one-year line
Crypto held one year or less is taxed as ordinary income — 10% to 37% federally depending on your bracket. Held longer than a year, it qualifies for long-term capital gains rates of 0%, 15%, or 20%. For someone in the 24% bracket, a $10,000 gain costs $2,400 short-term but $1,500 long-term — a $900 difference for waiting out the calendar.
What counts as a taxable event
Selling for dollars is the obvious one, but in the US swapping one coin for another, spending crypto on goods, and receiving staking or yield rewards are all taxable too. Moving coins between your own wallets is not. Since 2025, brokers report sales on Form 1099-DA, so the IRS increasingly sees the same numbers you do — accurate cost-basis records are no longer optional.
What this estimate leaves out
Real returns are messier than one flat rate: gains stack on top of your other income and can straddle brackets, high earners owe an extra 3.8% net investment income tax, most states tax gains too, and losses can offset gains plus up to $3,000 of ordinary income per year. Use this tool for a ballpark and a hold-versus-sell comparison, then confirm with a tax professional or proper tax software.
How to use this calculator
Enter your sale proceeds and your cost basis — what you originally paid, including the buy fee; the difference is your gain. Set the holding period to over a year or not, and pick your income bracket. The tool applies one approximate federal rate and shows the tax owed, plus a side-by-side of the short-term and long-term figures so the cost of selling early is explicit.
A worked example
You bought for $8,000 and sell for $20,000 — a $12,000 gain. In the 24% bracket, selling before the one-year mark taxes it as ordinary income at roughly $2,880. Hold past a year and the 15% long-term rate applies: about $1,800. Waiting the extra time saved roughly $1,080 on the same trade. High earners should add the 3.8% net investment income tax and any state tax on top, neither of which this quick estimate includes.