Cryptocurrency is taxed as property by the IRS in 2025, creating taxable events for every trade, sale, or use.

Capital gains apply when selling crypto: Short-term gains (held <1 year) taxed as ordinary income at 10-37% rates, Long-term gains (held ≥1 year) taxed at preferential 0%, 15%, or 20% rates based on income.

Example: Buy Bitcoin at $30,000, sell at $50,000 after 6 months = $20,000 short-term gain taxed at your income bracket (22-37% for most).

Same trade held 13 months = long-term gain taxed at 15% for most taxpayers.

Staking and mining income taxed as ordinary income at fair market value when received.

Taxable crypto events in 2025: (1) Selling crypto for USD—triggers capital gain/loss on the difference between purchase price and sale price. (2) Trading crypto-to-crypto—swapping ETH for BTC is a taxable sale of ETH and purchase of BTC. (3) Using crypto for purchases—buying a $5,000 car with Bitcoin triggers capital gain if Bitcoin appreciated since purchase. (4) Earning crypto income—staking rewards, mining income, airdrops taxed as ordinary income at receipt value.

Non-taxable events: Buying crypto with USD, transferring between your own wallets, gifting crypto under $18,000 (2025 limit), donating to qualified charities.