How Much Tax Will I Pay?
Capital Gains Tax (CGT)
The amount of Capital Gains tax that you pay depends on your earnings and how long you have held your assets for. You need to determine if you have held your crypto for short-term or long-term. The holding period begins on the day after you acquired the virtual currency and ends on the day you sell or exchange.
Short Term
Cryptocurrency held for less than a year.
Taxed at the ordinary income tax rate (listed below for the 2021 and 2022 tax years).
10% | $0 - $10,275 | $0 - $14,650 | $0 - $20,550 | $0 - $10,275 |
12% | $10,276 - $41,775 | $14,651 - $55,900 | $20,551 - $83,550 | $10,276 - $41,775 |
22% | $41,776 - $89,075 | $55,901 - $89,050 | $83,551 - $178,150 | $41,776 - $89,075 |
24% | $89,076 - $170,050 | $89,051 - $170,050 | $178,151 - $340,100 | $89,076 - $170,050 |
32% | $170,051 - $215,950 | $170,051 - $215,950 | $340,101 - $431,900 | $170,051 - $215,950 |
35% | $215,951 - $539,900 | $215,951 - $539,900 | $431,901 - $647,850 | $215,951 - $323,925 |
37% | $539,901+ | $539,901+ | $647,851+ | $323,926+ |
Long Term
Cryptocurrency sold after one year.
The tax rate is 0%, 15%, or 20% dependent on income.
The long term capital gains tax rate is often better than the short term rate so it can sometimes be beneficial to hold crypto for at least a year before disposing of it.
| Tax Rate | Single | Head of Household | Married Filing Jointly | Married Filing Separately |
|---|---|---|---|---|
0% | Up to $41,675 | Up to $55,800 | Up to $83,350 | Up to $41,675 |
15% | $41,676 – $459,750 | $55,801 – $488,500 | $83,351 – $517,200 | $41,676 – $258,600 |
20% | Over $459,750 | Over $488,500 | Over $517,200 | Over $258,600 |
Income Tax
Your rate of income tax (tax bracket) depends on your taxable income and your filing status. The United States has a progressive tax system, meaning people with higher taxable incomes pay higher federal income tax rates.
Income tax rates for 2022
10% | $0 to $10,275 | 10% of taxable income |
12% | $10,276 to $41,775 | $1,027.50 plus 12% of the excess over $10,276 |
22% | $41,776 to $89,075 | $4,807.50 plus 22% of the excess over $41,776 |
24% | $89,076 to $170,050 | $15,213.50 plus 24% of the excess over $89,076 |
32% | $170,051 to $215,950 | $34,647.50 plus 32% of the the excess over $170,051 |
35% | $215,951 to $539,900 | $49,335.50 plus 35% of the excess over $215,951 |
37% | $539,901 or more | $162,718 plus 37% of the excess over $539,901 |
You won't pay the same tax rate on your entire income, you will be taxed at the corresponding tax rate for your earnings within each bracket.
Example: Sam is a single filer with $45,000 taxable income, therefore she is in the 22% tax bracket. She pays: 10% on the first $10,275, 12% on the earnings between $10,276 to $41,775 22% on the rest.
Which filing status applies to me?
If you are unsure of your filing status follow the below link for IRS guidance:
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