How does the capital gains tax on cryptocurrency differ between long term and short term investments?

1 answers

• Dec 16, 2021 · 3 years ago
  When it comes to capital gains tax on cryptocurrency, the difference between long term and short term investments is significant. If you hold your cryptocurrency for more than one year, you'll qualify for long term capital gains tax treatment. This means that the tax rate you'll pay on your gains will be based on your income bracket, with rates ranging from 0% to 20%. However, if you sell your cryptocurrency within one year of acquiring it, you'll be subject to short term capital gains tax. Short term gains are taxed as ordinary income, meaning you'll pay the same tax rate as your regular income. This rate can be as high as 37% for the highest income bracket. So, if you're planning to invest in cryptocurrency, it's important to consider the potential tax implications and the benefits of holding your investment for the long term.
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