How to Legally Reduce Your US Crypto Taxes

Most of what is written under this heading is either illegal, useless, or a description of not selling. What follows is the set of levers that genuinely change a US crypto tax number, roughly in order of how much they move it, with the popular non answers at the end.

1. Get the basis right, first

This is not tax planning, it is accuracy, and it is almost always the largest single reduction available. Overstated gains come from the same handful of causes every year: transfers between your own wallets counted as sales, acquisition costs that were never found and so defaulted to zero, fees left out of basis, and income already taxed on receipt not carried into basis for the later disposal.

Revenue Procedure 2024-28 requires cost basis to be tracked per wallet or account rather than pooled. That change makes accurate records more valuable, not less, because a pooled figure now diverges from what brokers report.

2. Hold past twelve months where the position allows it

Short term gains, on assets held one year or less, are taxed as ordinary income at rates up to 37%. Long term gains are taxed at 0%, 15% or 20% depending on your taxable income and filing status. That is the largest single rate lever in the US system, and it is entirely under your control at the moment of disposal.

The practical implication is that the holding period should be visible to you before you sell, not discovered afterwards.

3. Harvest losses, including inside the same asset

Losses offset gains. Up to 3,000 dollars of net losses can reduce ordinary income each year, with the remainder carried forward.

The wash sale rule, which disallows a loss where you repurchase the same security within 30 days, applies to stocks and securities rather than crypto, because the IRS treats crypto as property. As of 2026 that means you can sell crypto at a loss and repurchase immediately while still claiming the loss. Congress has repeatedly proposed extending the rule to crypto, so check the current position before building a plan on it.

4. Choose what you sell, deliberately

With per wallet or per account basis tracking under Rev. Proc. 2024-28 and adequate records, which units you dispose of is a decision rather than an accident. Disposing of high basis units realises a smaller gain; disposing of low basis long held units may realise a larger gain at the lower long term rate. Neither is universally right, which is exactly why it should be chosen.

5. Donate appreciated crypto rather than cash

Charitable donation of appreciated property has a different profile from selling and donating the proceeds, because the sale step is what triggers the gain. Substantiation requirements for non cash donations are strict and scale with value, and crypto is treated as property for this purpose. This one is worth doing properly with an advisor rather than approximately.

6. Use the accounts and the timing you already have

Your marginal rate is a function of your total taxable income for the year, so the year in which a gain lands changes what it costs. Deferring a disposal into a lower income year, or realising one in a year with unusually low income, is ordinary timing rather than aggressive planning.

What does not work

• Not cashing out to dollars. A crypto to crypto swap is a disposal. Staying in crypto does not defer anything.
• Moving coins between your own wallets or exchanges. Not a disposal, and not a reduction either.
• Assuming no form means no reporting. The IRS states you must report digital asset transactions whether or not they result in a gain or loss, and every Form 1040 carries a digital asset question.
• Relocating for the last month of the year. Residence rules are not decided by where you were in December.

Our tax loss harvesting guide covers the mechanics of the loss lever, and US crypto tax covers the rules the levers operate on.

General information, not tax advice. Rules change and depend on your circumstances. Confirm the current position with the relevant tax authority or a qualified tax professional.