Top 10 Crypto Tax Strategies for 2026

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Crypto season is back, and when cryptocurrency starts moving, investors naturally start thinking about gains. But making money is only half the equation. The other half is figuring out how much of that gain you actually get to keep.

As tax attorneys and cryptocurrency investors ourselves, we have spent years helping investors understand how crypto fits into the tax code and how existing tax strategies can be applied to digital assets.

The good news is that cryptocurrency does not live in some completely separate tax universe. In most situations, crypto is simply treated as an asset. Depending on what you are doing with it, you may be dealing with short-term capital gains, long-term capital gains, ordinary income, self-employment income, or potentially tax-advantaged retirement accounts. Once you understand which lane you are in, you can start engineering a better tax result.

Here are ten crypto tax strategies investors should understand for 2026.

First: Understand How Cryptocurrency Is Taxed

Before getting into the strategies, there are a few basic concepts every crypto investor needs to understand. Crypto does not have its own special capital gains tax rate.

In general, when you buy cryptocurrency as an investment and later sell it, you are dealing with either short-term or long-term capital gains. If you hold the cryptocurrency for less than 12 months, the gain is generally taxed at ordinary income tax rates. If you hold it for more than 12 months, you move into the long-term capital gains brackets.

That distinction becomes incredibly important because long-term capital gains may qualify for rates of 0%, 15%, or 20%, depending on your taxable income. For a deeper walkthrough, see our guide on how cryptocurrency is taxed and how to plan before you sell.

There is also another category to consider. If you are actively earning cryptocurrency through activities such as mining, highly involved staking, operating nodes, creating NFTs, or another business activity, that income may be treated differently and could potentially be subject to self-employment tax.

That is why the first question should always be: how am I actually making money from crypto?

• Are you buying and holding?
• Trading?
• Mining?
• Staking?
• Running nodes?
• Creating NFTs?

The activity determines which tax strategies may actually apply.

1. Harvest Crypto Gains and Losses Strategically

Most investors have heard of tax-loss harvesting. But we also like to talk about tax-gain harvesting.

A lot of people hear "capital gains tax" and immediately assume they are paying 20%. That is not necessarily true.

Long-term capital gains have different tax brackets. Depending on your taxable income, some long-term gains may potentially fall into the 0% capital gains bracket. That creates an opportunity. Suppose you have cryptocurrency you have owned for more than a year and you are currently in a relatively low taxable-income year. You may be able to intentionally sell some crypto, recognize the gain, and take advantage of a lower capital gains rate.

Even if you are not in the 0% bracket, understanding when you move from the 15% long-term capital gains rate into the 20% rate can still be valuable. Instead of selling a massive position all at once, you may be able to strategically sell portions over multiple years.

Crypto Tax Loss Harvesting

The other side of the strategy is harvesting losses.

Suppose you purchased Bitcoin at $90,000 and it drops to $60,000. You could continue holding it and wait for Bitcoin to return to $90,000. But if you simply hold the asset, you never actually realized the $30,000 loss.

Instead, you could sell the Bitcoin and lock in that loss. That realized loss may then be available to offset capital gains elsewhere in your portfolio. If you still believe in the cryptocurrency long-term, you may decide to repurchase it.

The point is that volatility can create tax-planning opportunities. A decline in value is not necessarily useful from a tax standpoint until that loss is actually realized.

2. Use a Crypto Roth IRA or Roth 401(k)

One of our favorite cryptocurrency strategies is actually one of the oldest tax strategies available: use a retirement account.

You do not need a new type of tax vehicle just because the investment is cryptocurrency. You can potentially use:

• Roth IRAs
• Traditional IRAs
• Roth 401(k)s
• Solo 401(k)s
• Health Savings Accounts
• Education Savings Accounts

We particularly like the Roth IRA. Why? Because the Roth IRA can purchase cryptocurrency as an investment, and if the rules are properly followed, the growth can potentially come out tax-free in retirement.

Inside the Roth IRA, you are not worrying about recognizing a taxable event on your personal tax return every time you trade from one cryptocurrency into another. You are building wealth inside a tax-advantaged vehicle. Many investors use an IRA/LLC to gain more direct control over those investments.

Start With Your Annual Contribution

A lot of cryptocurrency investors hear this strategy and immediately say: "I already have hundreds of thousands of dollars of crypto personally. Can I just move all of it into my Roth IRA?"

It generally does not work that way. Instead, think about it like a snowball rolling downhill. Every year you are going to purchase cryptocurrency anyway. Why not start by purchasing some of it inside the Roth IRA? Make your annual contribution.

If you have a small business and a retirement plan, evaluate whether you can invest additional retirement dollars there. Then continue buying personally after you have taken advantage of the tax-advantaged accounts available to you.

Do it again next year. And the next year. Over ten, twenty, or thirty years, that can become a substantial amount of cryptocurrency growing inside tax-advantaged accounts.

Directed IRA has been helping clients use self-directed retirement accounts to invest in cryptocurrency for years.

3. Hold Crypto for at Least 12 Months Whenever Possible

This strategy is not flashy. But it can make a massive difference. If you are buying cryptocurrency personally and you expect to sell it for a gain, try to hold the asset for at least 12 months whenever it makes investment sense.

Why? Because selling before the 12-month mark generally creates a short-term capital gain. Short-term capital gains are taxed at ordinary income tax rates.

Once you cross into long-term capital gains treatment, you open up the possibility of lower tax rates and additional planning strategies. That can mean the difference between paying your ordinary income tax rate and potentially paying a 0%, 15%, or 20% long-term capital gains rate.

Now, if the investment has declined and you want to realize a loss, that can be a different conversation. But before intentionally taking a gain, know exactly how long you have held the asset. Sometimes waiting a little longer can materially change the tax result.

4. Understand the Special Tax Treatment of NFTs

NFTs have certainly cooled off compared with the frenzy we saw several years ago. But if you are still buying or selling NFTs, understand that NFTs may receive different tax treatment than ordinary cryptocurrency investments.

NFTs may potentially be treated as collectibles for federal tax purposes. Collectibles can be subject to a maximum long-term capital gains rate of 28%.

That is different from the traditional maximum long-term capital gains rate many investors associate with stocks or cryptocurrency. This is less of a "strategy" and more of a rule you need to understand before selling. Do not assume that selling Bitcoin and selling an NFT necessarily creates the exact same tax result.

5. Consider a Charitable Remainder Trust for Large Crypto Gains

For cryptocurrency investors sitting on significant appreciation, one of the more advanced strategies we use is a Charitable Remainder Trust, commonly called a CRT.

We have used these strategies with real estate investors for years, and over the last several years we have increasingly implemented them for cryptocurrency investors.

Imagine you bought crypto years ago and your portfolio is now worth $1 million, $2 million, $5 million, or even $10 million. Selling that position personally could create a substantial capital gain.

A properly structured Charitable Remainder Trust may allow the trust to sell the cryptocurrency without immediately recognizing the same capital gain tax you would have personally incurred at the time of sale.

• The proceeds remain inside the trust and can then be reinvested.
• The trust pays you an income stream according to the terms of the trust.
• The payout depends on several factors, including your age and how the trust is structured.
• The assets also receive additional asset-protection characteristics while held inside the trust.

When Does a CRT Start Making Sense?

We generally look at CRTs when the unrealized gain becomes significant.

If you have a relatively small amount of cryptocurrency appreciation, the legal and administrative costs may outweigh the benefit. But when you are talking about seven figures of appreciated assets, a CRT absolutely deserves to be part of the conversation.

• There are setup costs.
• There are ongoing administration costs.
• There is also a charitable component.

This is not a strategy you implement casually. But for the right investor, the tax savings and long-term planning opportunities can be substantial. If you are weighing a CRT against other trust structures, our guide to revocable versus irrevocable trusts explains where a CRT fits.

6. Borrow Against Your Crypto Instead of Selling

Real estate investors understand this strategy immediately. You own a property. It appreciates. Do you always sell the property to access the equity? No. Sometimes you refinance the property and borrow against it.

Now we are seeing the same strategy increasingly available with cryptocurrency portfolios. Rather than selling appreciated crypto and triggering capital gains tax, an investor may potentially borrow against the cryptocurrency.

The loan proceeds themselves are generally not treated as capital gain because you did not sell the asset. You still own the cryptocurrency. That means you may still participate in future appreciation while accessing liquidity today.

Of course, the loan has a cost. There is interest, there may be collateral requirements, and there may be risks associated with volatility and liquidation. This is not free money. You need to run the numbers carefully.

But for investors who strongly believe their cryptocurrency will continue appreciating, borrowing against the asset can sometimes provide liquidity without immediately triggering the tax associated with a sale.

7. Watch the New Opportunity Zone Rules

Opportunity Zones are another strategy that crypto investors should have on their radar.

The general concept is straightforward. Suppose you sell $200,000 of cryptocurrency. Your original basis was $100,000. That means you have $200,000 in proceeds and $100,000 in capital gain.

With an Opportunity Zone strategy, you are generally focused on reinvesting the gain, not necessarily all of the sale proceeds. That gain may potentially be reinvested into a qualifying Opportunity Zone structure, allowing you to defer taxes and potentially receive additional tax benefits depending on how long the investment is held and the rules applicable at that time. We break the structure down further in what is a qualified opportunity zone fund.

Opportunity Zones can also create something cryptocurrency investors sometimes overlook: diversification.

We are not saying sell all of your crypto and put it into real estate. But if you are already planning to take some chips off the table, reallocating part of your gain into qualifying real estate may allow you to diversify while also pursuing tax benefits.

For investors expecting significant cryptocurrency gains over the next several years, Opportunity Zones should at least be part of the planning discussion.

8. Use an S Corporation When Crypto Activity Becomes a Business

This is where we need to draw an important line.

Buying and selling cryptocurrency personally does not automatically make you a business. Simply creating an LLC does not magically turn your investing activity into a business either.

An LLC may provide asset protection, privacy, administrative benefits, or other advantages depending on how it is structured. But it does not automatically make personal investment expenses deductible.

However, there are crypto activities that may legitimately rise to the level of a business. Examples may include:

• Crypto mining
• Operating substantial mining equipment
• Creating NFTs
• Highly active node operations
• Certain staking activities
• Other substantial operational activity within the crypto ecosystem

When you are actively generating ordinary business income, that is where an S corporation may become relevant. The S corporation can potentially help with self-employment tax planning and provide a business structure through which you may deduct legitimate business expenses.

For example, a legitimate crypto-mining business may have expenses related to:

• Mining equipment
• Computers
• Electricity
• Home office
• Business travel
• Professional services
• Other ordinary and necessary business expenses

But the key is that there needs to actually be a business. Do not create an LLC, call yourself a crypto trader, and assume your vacations and home office suddenly become deductible. The IRS looks at substance, not simply the name on your entity filing.

9. Use the "Lazy 1031" Strategy

We refer to another strategy as the Lazy 1031.

This is not an actual Section 1031 exchange. A traditional 1031 exchange applies to qualifying real estate. You sell one investment property and acquire another qualifying property while following the required rules, allowing you to defer the gain. You cannot simply complete a traditional 1031 exchange with cryptocurrency.

The Lazy 1031 is different. Instead of directly deferring the crypto gain, you recognize the gain and then intentionally create offsetting deductions elsewhere.

Suppose you sell cryptocurrency and recognize a $100,000 gain. Now you take some of those proceeds and purchase an income-producing asset that qualifies for substantial depreciation. That could potentially include certain equipment or qualifying real estate strategies. If the investment generates significant depreciation deductions, those deductions may help offset taxable income.

That is why we call it the Lazy 1031. You are not technically exchanging one asset for another. Instead, you are recognizing income in one area and strategically generating deductions in another.

Buy Something That Produces Income

The purpose of this strategy is not to go buy something unwise simply because it creates a deduction.

• We want the new investment to generate income.
• You might diversify into real estate.
• You might purchase business equipment.
• You might invest in another income-producing asset that qualifies for depreciation.

The ideal result is that you:

1. Recognize the crypto gain.
2. Reinvest some of the proceeds.
3. Generate a legitimate deduction.
4. Create another source of income.
5. Diversify your overall portfolio.

That is tax planning tied directly to wealth building.

10. Know Your Capital Gains Bracket Before You Sell

Our final strategy brings us back to one of the most important concepts we discussed at the beginning: know your tax bracket before selling appreciated crypto.

A lot of investors simply assume: "I have a long-term capital gain, so I am paying 20%." Not necessarily.

Depending on your taxable income, some gains may fall into the 0% long-term capital gains bracket. Other investors may still be inside the 15% bracket rather than the 20% bracket. Understanding those thresholds can influence how much cryptocurrency you sell in a particular year.

Maybe you do not liquidate the entire position at once. Maybe you sell $10,000 or $20,000 this year. Then another amount next year. Maybe you intentionally recognize gains during a year when your other income is lower. The strategy is not complicated.

Bonus: Crypto Trading Does Not Automatically Make You a Business

This point is important enough to repeat. Investing and trading do not automatically become a business simply because you create an LLC.

We regularly see people told: "Set up a crypto LLC and now your home office, travel, conferences, and other expenses are deductible."

That is not how it works. Your business activity determines whether you have legitimate business deductions. The LLC itself does not create the deduction.

If your cryptocurrency activity truly involves mining, active operations, NFTs, nodes, or another legitimate trade or business, there may be planning available. But simple investing remains investing. Do not build a tax strategy around an entity name.

The Top 10 Crypto Tax Strategies for 2026

To recap, here are the ten strategies every serious crypto investor should know:

1. Harvest gains and losses strategically
2. Use a Crypto Roth IRA or Roth 401(k)
3. Hold cryptocurrency at least 12 months whenever possible
4. Understand NFT tax treatment
5. Consider a Charitable Remainder Trust for major gains
6. Borrow against crypto rather than immediately selling
7. Evaluate Opportunity Zone strategies
8. Use an S corporation when your crypto activity is genuinely a business
9. Consider the Lazy 1031 strategy using depreciation
10. Know your long-term capital gains bracket before selling

The important takeaway is that crypto itself may be new, but many of the best tax strategies are not. Retirement accounts have been around for decades. Capital gains planning has been around for decades.

Charitable trusts, business entities, depreciation, borrowing against appreciated assets, and income planning have all been used across real estate, stocks, businesses, and other investments. Cryptocurrency investors simply need to understand how those existing strategies apply to their assets.

Build Wealth in Crypto and Keep More of It

We are investors too. We want to make money in cryptocurrency. But making the gain and then unnecessarily giving a large portion of it away in taxes because there was no planning is not the goal.

The earlier you start thinking about the tax side, the more options you generally have.

If you are holding significant cryptocurrency, generating substantial gains, mining, staking, or trying to determine whether strategies such as a Crypto Roth IRA, Charitable Remainder Trust, S corporation, or Opportunity Zone make sense for you, a Comprehensive Tax & Business Consultation is the right place to start. You can also book a call with a KKOS client advisor to review the legal and tax structure before you make the transaction.

And if your goal is to build cryptocurrency wealth inside a tax-advantaged retirement account, Directed IRA can help you establish a self-directed account designed to invest in alternative assets, including cryptocurrency.