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News

IRS Crypto Tax Rules Will Be Adjusted in 2026

January 1, 2025 - Around 2 mins mins to read

Key Points:

  • IRS crypto tax regulations will be extended for crypto exchanges for another year, through 2026, to choose cost-basis methods for calculating gains and losses.
  • Many CeFi brokers were unprepared to support alternative accounting methods, prompting the IRS to provide temporary relief to prevent higher tax liabilities for taxpayers.
The Internal Revenue Service is giving cryptocurrency holders a temporary reprieve when it comes to upcoming tax reporting rules.
IRS Crypto Tax Rules Will Be Adjusted in 2026

Read more: IRS Crypto Tax Draft Form Released to Aid Reporting of Digital Asset Transactions 

IRS Crypto Tax Reporting Deadline Extended for One More Year

The IRS crypto tax rule, as outlined in Notice 2025-07, will grant taxpayers on CeFi exchanges an extra year to utilize various methods of calculating gains and losses from digital asset transactions.

Previously, the IRS required a wallet-by-wallet approach to determining cost-basis, starting on January 1, 2025. Under the new guidance, taxpayers can continue to use their own records or tax software to identify specific units sold or transferred. IRS crypto tax regulations will remain in place throughout 2025, giving brokers and taxpayers more time to adapt to the forthcoming requirements.

The final custodial broker regulations under Section 6045 require the brokers to utilize the First-In, First-Out accounting method unless taxpayers elect alternatives such as Highest-In, First-Out or Specific Identification.

Finalized DeFi Reporting Rules Explain Broker Obligations

Concerns had been raised as many CeFi brokers were reportedly not ready to support Spec ID by the original deadline of 2025. Tax experts said defaulting to FIFO could mean higher tax liabilities when assets are sold by crypto holders.

The reprieve only extends to CeFi transactions that occur between Jan. 1 and Dec. 31, 2025. Starting in 2026, taxpayers will need to affirmatively choose an accounting method through their broker.

In the same breadth, the U.S. Department of the Treasury and IRS finalized rules concerning reporting requirements by DeFi brokers, requiring brokers to report the gross proceeds of sales of digital assets through Form 1099. The move does not imply an imposition of added tax obligations for holders.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

CeFi

Crypto Tax

DeFi

IRS

Treasury Department

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Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.