NFT Taxes: How Buying, Selling & Minting NFTs Are Taxed

In the US, NFTs are taxed as property, just like other crypto. That means most NFT activity triggers a capital gain or loss when you dispose of one, while NFTs you earn or receive for work are taxed as ordinary income at their fair market value.

The wrinkle with NFTs is that a single "buy" or "sell" often involves two taxable events, because you usually pay for the NFT with another crypto like ETH. This guide walks through each scenario so you know exactly what to report.

The tax basics: NFTs are property

The IRS treats NFTs the same way it treats other digital assets — as property, not currency. That framing drives everything else. When you dispose of a digital asset, you calculate gain or loss as your sale proceeds minus your cost basis (what you paid, including fees). Holding it for a year or less means short-term gains taxed at your ordinary income rate; holding longer than a year qualifies for lower long-term capital gains rates.

Two categories of NFT income exist:

• Capital gains/losses — from buying and later selling or trading an NFT.
• Ordinary income — from creating and selling NFTs as a business, earning royalties, or receiving NFTs as payment or rewards.

Buying an NFT

Purchasing an NFT with US dollars is not itself a taxable event — you're just acquiring property, and your cost basis is what you paid plus gas and marketplace fees.

But most people buy NFTs with crypto, and that is taxable. Spending ETH to buy an NFT is a disposal of the ETH. You owe capital gain or loss on the difference between the ETH's value when you spent it and your basis in that ETH. For example, if you bought ETH for $1,000 and later used it (now worth $1,500) to mint an NFT, you have a $500 capital gain on the ETH — before you've sold the NFT at all.

Selling or trading an NFT

Selling an NFT is a disposal. Your gain or loss is the proceeds (in USD terms) minus your cost basis. If you receive crypto as payment, use the fair market value of that crypto at the time of sale as your proceeds.

Trading one NFT for another is also a taxable disposal of the first NFT, valued at the fair market value received. There's no like-kind exchange treatment for digital assets, so swaps are fully taxable.

One thing to watch: the IRS has signaled that some NFTs may be treated as collectibles, which carry a higher maximum long-term capital gains rate (28%) than ordinary capital assets. Whether an NFT is a collectible depends on the underlying asset it represents. When in doubt, discuss classification with a professional.

Minting and creating NFTs

If you mint an NFT you bought, the gas fee is generally added to your cost basis rather than deducted immediately.

If you're the creator minting NFTs to sell, the tax picture changes. Proceeds from selling NFTs you created are typically ordinary income (and potentially self-employment income if it's a trade or business), not capital gains. Royalties you continue to earn on secondary sales are ordinary income as well, recognized at fair market value when received.

Earning NFTs

Receiving an NFT for free isn't always tax-free. NFTs you earn have an ordinary income component at their fair market value when you receive them:

How you got the NFT	Tax treatment
Bought with crypto	Capital gain/loss on the crypto spent; basis in NFT = value paid
Received as payment for work	Ordinary income at fair market value
Play-to-earn / reward drop	Generally ordinary income at fair market value when received
Genuine gift	Not income to you; you carry over the giver's basis

The income you recognize when receiving an NFT becomes your cost basis, so you aren't taxed twice when you later sell it. This mirrors how staking rewards are handled.

Reporting and record-keeping

NFT capital gains and losses go on Form 8949 and Schedule D. Ordinary income from creating or earning NFTs is reported on Schedule 1 or Schedule C, depending on whether it rises to a business.

Starting with the 2025 tax year, US brokers began issuing Form 1099-DA for digital asset sales, and cost basis is now tracked on a per-wallet basis rather than universally. Decentralized NFT marketplaces may not report at all, so your own records are essential. Track the date, the USD value in and out, and every gas and marketplace fee. If you use centralized platforms, keep your exchange tax documents alongside your on-chain history.

For more strategy on offsetting gains, see our tax strategy hub, and browse the DeFi & staking guides for related topics.

This article is general information, not tax advice. Consult a qualified professional about your specific situation.