How Long to Hold Crypto to Pay Less Tax
Long-term crypto capital gains: hold over one year to unlock 0-20% rates instead of ordinary income. Here's the exact holding period and how to time it.
To pay less tax on crypto, hold it for more than one year before you sell. Cross that one-year line and your profit is taxed as a long-term crypto capital gain at 0%, 15%, or 20% — instead of the ordinary income rates (up to 37%) that apply to coins sold within a year.
Why the holding period matters
The IRS treats cryptocurrency as property, so selling, swapping, or spending it triggers a capital gain or loss. How long you owned the coin before disposing of it determines which rate applies. This is the single biggest lever most investors have over their crypto tax bill, and it costs nothing but patience. For the full picture of how disposals are taxed, see how cryptocurrency is taxed.
- Short-term — held one year or less. Taxed at your ordinary income tax rate (10%–37%).
- Long-term — held more than one year. Taxed at the preferential 0%, 15%, or 20% rate.
The exact rule: "more than one year"
The holding period starts the day after you acquire the crypto and includes the day you sell it. To qualify as long-term, you need to hold for more than 365 days — a full year plus one day. Selling on the one-year anniversary itself is still short-term.
Example: if you buy on March 15, 2025, your holding period begins March 16, 2025. A sale on March 16, 2026 or later is long-term. A sale on March 15, 2026 is still short-term. When in doubt, wait an extra day.
2026 long-term capital gains rates
Long-term rates are tied to your taxable income and filing status. The three brackets are 0%, 15%, and 20%. Many investors in lower brackets pay 0% on long-term gains — one reason the holding period is worth planning around.
| Rate | Who it typically applies to |
|---|---|
| 0% | Lower taxable income (a meaningful zero-tax window for many filers) |
| 15% | The broad middle-income range |
| 20% | The highest earners |
High earners may also owe the 3.8% Net Investment Income Tax on top of these rates. Because the exact income thresholds are set each year and depend on your filing status, confirm the current numbers before you sell.
Short-term vs. long-term, side by side
Say you have a $10,000 gain and you're in a 32% ordinary bracket versus a 15% long-term bracket. Selling before the one-year mark costs you $3,200; waiting past it costs $1,500 — a difference of $1,700 on the same trade. The only variable that changed was the calendar.
Watch the cost-basis and 1099-DA changes
Two rules make accurate holding-period tracking more important than ever for 2025 and beyond:
- Per-wallet cost basis. Starting in 2025, basis is tracked per wallet or account rather than across all your holdings. You can no longer freely pool lots, so which specific coins you sell — and how long you held them — matters more.
- Form 1099-DA. Brokers and exchanges began issuing Form 1099-DA for 2025 transactions, reporting your proceeds to the IRS. Your records need to match, including holding periods that determine short- vs. long-term treatment. See your Coinbase tax documents for an example of what exchanges now report.
A few holding-period traps
- Earned crypto resets the clock. Staking rewards, mining, airdrops, and interest are ordinary income when received, and their holding period starts on that date — not when you first entered the position. When you later sell those coins, the clock runs from receipt. See crypto staking taxes for how this works.
- Every swap is a disposal. Trading one token for another (even crypto-to-crypto, or crypto-to-stablecoin) ends the holding period on the coin you gave up. You can't "roll" gains tax-free.
- Spending counts too. Using crypto to buy goods or services is a taxable disposal, subject to the same short- vs. long-term rules.
- Gifts carry the giver's clock. If someone gifts you crypto, you generally inherit their original holding period and cost basis.
How to use this to pay less
If you're sitting on a gain and you're close to the one-year mark, the math often favors waiting. If a position is near a bracket edge, you might spread sales across two tax years to stay in the 0% or 15% band. And you can pair long-term gains with tax-loss harvesting to offset what you owe. Just don't let the tax tail wag the investment dog — a coin can fall more than the tax you'd save by waiting.
Let Glide do the math
Connect your wallets and exchanges — Glide identifies every transaction, tracks each coin's exact holding period, and flags which lots qualify for long-term rates before you sell.
Calculate my crypto taxes →This article is general information, not tax advice. Consult a qualified professional about your specific situation.