Crypto tax rates for 2021
Cryptocurrency tax rates depend on your income, tax filing status, and the length of time you owned your crypto before selling it. If you owned it for 365 days or less, then you pay short-term gains taxes, which are equal to income taxes. If you owned it for longer, then you pay long-term gains taxes.
Here are the cryptocurrency tax rates on long-term gains for the 2021 tax year:
| TAX RATE | SINGLE | MARRIED FILING JOINTLY | HEAD OF HOUSEHOLD |
|---|---|---|---|
| 0% | $0-$40,400 | $0-$80,800 | $0-$54,100 |
| 15% | $40,401-$445,850 | $80,801-$501,600 | $54,101-$473,750 |
| 20% | >$445,850 | >$501,600 | >$473,750 |
Data source: IRS.
Short-term gains are taxed as ordinary income. Here are the crypto tax brackets for the 2021 tax year on these short-term gains:
| TAX RATE | SINGLE | MARRIED FILING JOINTLY | HEAD OF HOUSEHOLD |
|---|---|---|---|
| 10% | $0-$9,950 | $0-$19,900 | $0-$14,200 |
| 12% | $9,951-$40,525 | $19,901-$81,050 | $14,201-$54,200 |
| 22% | $40,526-$86,375 | $40,526-$86,375$81,051-$172,750 | $54,201-$86,350 |
| 24% | $86,376-$164,925 | $172,751-$329,850 | $86,351-$164,900 |
| 32% | $164,926-$209,425 | $329,851-$418,850 | $164,901-$209,400 |
| 35% | $209,426-$523,600 | $418,851-$628,300 | $209,401-$523,600 |
| 37% | >$523,600 | >$628,300 | >$523,600 |
Data source: IRS.
You can choose to sell older coins first to pay the lower long-term gains tax rates. Imagine you’ve been buying Bitcoin regularly for the past two years and now you’ve decided to sell some. By selling Bitcoin you’ve had for more than a year, it will be considered a long-term gain and you’ll pay a lower crypto tax rate on it.