The Internal Revenue Service (IRS) has issued a comprehensive update on cryptocurrency taxation, highlighting stricter reporting requirements for both individual taxpayers and businesses. Effective in 2026, brokers and payment processors will report detailed transaction data to the IRS, including purchases, sales, and transfers of digital assets.
Cryptocurrencies remain classified as property for tax purposes, meaning any gains from trading, selling, or exchanging crypto are subject to capital gains taxes. Additionally, crypto received through salaries, rewards, or airdrops is treated as ordinary income. This dual approach ensures all taxable events are accounted for, reducing the risk of underreporting or tax evasion.
Experts warn that the new reporting framework may significantly impact retail investors who frequently trade smaller amounts of crypto. Accurate record-keeping and timely reporting are now more critical than ever. Financial advisors suggest using specialized tax software to track transactions across multiple wallets and exchanges.
The IRS initiative aligns with broader government efforts to enhance transparency in the digital asset space. According to a recent survey, nearly 30% of U.S. crypto holders have underreported gains in previous tax filings, which prompted the agency to take a stricter stance. “These regulations signal a new era of accountability for crypto investors in the United States,” said a tax attorney specializing in digital assets.
