This article is informational only — not tax, legal, or investment advice. If you had more than a handful of transactions in 2025, moved states during the year, are active in DeFi, received staking or airdrop income, or suffered a theft, bring a crypto-literate CPA or Enrolled Agent into the picture before you file anything. The rules changed more in the last eighteen months than in the previous five years combined, and getting the 2025 return right is harder than it looks.
This is Part 1 of the Crypto Tax 2026 series. It orients you in the rules that apply to the return you just filed — or are about to file on extension. Parts 2, 3, and 4 cover what counts as a taxable event, how cost basis actually works under the new rules, and the mechanics of filing.
What this article is (and isn't)
The federal filing deadline for 2025 individual returns was April 15, 2026. If you filed Form 4868, you have until October 15, 2026 — but only for the filing, not the payment. If you already filed and realize something is wrong, Form 1040-X amended returns can generally be submitted within three years of your original filing or two years of payment, whichever is later.
What this article will cover: the three regulatory shifts that landed on your 2025 return, the TCJA sunset outcome as finalised in 2025, what the new Form 1099-DA actually reports, and why self-custody holders carry an outsized share of the 2026 record-keeping burden. What it will not cover: DAO governance edge cases, DeFi liquidity math, NFT royalty structures, international reporting (FBAR, Form 8938), miner and business-entity rules. Those are CPA territory without exception.
The three big shifts landing on your 2025 return
Tax year 2025 was not one rule change. It was three, stacking at once.
1. Final broker regulations (T.D. 10000). Treasury Decision 10000 was published in the Federal Register on July 9, 2024 at 89 FR 56480, implementing IRC §6045 digital-asset broker reporting. Beginning with 2025 transactions, custodial brokers are required to file information returns with the IRS and furnish recipient statements to taxpayers.
2. Form 1099-DA. This is the vehicle for that reporting. For 2025 transactions, brokers report gross proceeds only. Basis reporting for "covered" digital assets begins with 2026 transactions. Recipient copies for 2025 activity were due to be furnished by February 17, 2026. Notice 2024-56 provides good-faith penalty relief for brokers on their first-year filings, and Notice 2025-07 extended transition relief by allowing brokers an additional year to build basis-allocation technology.
3. Rev. Proc. 2024-28. Effective January 1, 2025, this revenue procedure ends the long-tolerated "universal" cost-basis approach — the practice of pooling every exchange account and self-custody wallet into one basis ledger. Every wallet and every account is now its own tracked unit.
Even if your tax software looks the same on the surface, the rails underneath moved this year.
TCJA sunset: what actually happened
The 2017 Tax Cuts and Jobs Act contained dozens of individual-side provisions scheduled to sunset on December 31, 2025. For crypto holders, the load-bearing questions were the individual income-tax brackets and the §165(h) restriction on personal casualty and theft losses — the rule that said, from 2018 through 2025, you could only deduct a casualty or theft loss if it occurred in a federally declared disaster area.
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. It made the seven TCJA individual brackets (10%, 12%, 22%, 24%, 32%, 35%, 37%) permanent, and it made the §165(h) personal theft-loss restriction permanent as well. Starting with tax year 2026, OBBBA expands the allowable category slightly to include state-declared disasters — but that change is prospective. It does not affect your 2025 return.
The practical consequence for crypto: if you lost assets in 2025 to a wallet drainer, a rug pull, an exchange collapse, or any criminal theft not occurring in a federally declared disaster zone, the personal theft-loss deduction is generally not available on your 2025 return. There is a narrow path under IRC §165(c)(2) for losses with a clear profit motive, documented criminal activity, and no reasonable prospect of recovery — but the evidentiary burden is substantial and this is not a deduction you claim without a CPA. Do not assume a rug pull is deductible.
Form 1099-DA and what self-custody does not generate
The most important thing a self-custody holder needs to understand about 1099-DA is what it does and does not capture.
Who files a 1099-DA: custodial digital-asset trading platforms (Coinbase, Kraken, Gemini, and similar), hosted-wallet providers, digital-asset kiosks, and certain payment processors (processors of digital-asset payments, or PDAPs). These entities take possession of your assets.
Who does not file: non-custodial wallet providers (Zelcore, Trezor, Ledger, MetaMask), the developers of decentralised exchange front-ends (the DeFi broker rule was repealed by H.J.Res.25, signed April 10, 2025), peer-to-peer transfers between individuals, and miners or stakers who do not custody assets for others.
This is the trap. A Zelcore-to-Zelcore transfer generates no 1099-DA. A self-custody swap through a DEX front-end generates no 1099-DA. A staking reward paid directly to your wallet generates no 1099-DA. None of this makes those events non-taxable. It means the reporting burden falls entirely on you.
The IRS is not blind. Most users' activity touches a custodial broker at some point — deposits, cash-out, fiat on-ramp — and those legs generate 1099-DAs that tie back to your identity. The paper trail exists. It is just incomplete, and the gaps you do not reconcile yourself are the gaps that become problems in an audit. Exporting your transaction history from your self-custody wallet is the first practical step; if you are unclear on why self-custody sits outside the broker framework at all, What Is a Crypto Wallet covers the distinction.
The wallet-by-wallet rule, decoded
Under Rev. Proc. 2024-28, starting January 1, 2025, cost basis is tracked per wallet or account — not across your whole portfolio. Within each wallet, the default method is FIFO unless you made a specific identification at or before the moment of disposition.
Taxpayers who had been using "universal" basis before 2025 had a one-time safe harbor to allocate their existing unused basis across wallets as of January 1, 2025. That allocation had to be completed before the first 2025 disposition from the affected wallet. Once made, the allocation is binding under §1012. If you never did the allocation and you sold in 2025, you are either retroactively defensible under "reasonable method" arguments, or you are in CPA-rescue mode.
The practical shift is larger than it sounds. Every self-custody wallet is now its own ledger with its own FIFO queue. If you hold BTC on a Zelcore address, LTC on another, and tokens on a third, each is tracked separately. Moving assets between your own wallets is not a disposition, but it does transfer basis — and that transfer now has to be recorded in a way the old universal approach never required. Tracking holdings across chains is the operational companion to this accounting shift.
Part 3 walks through the math. The takeaway for orientation: universal basis is gone. If your 2024 workflow assumed it, your 2025 workflow has to change.
State, calendar, and when to call a CPA
Federal is only half the story. State treatment diverges sharply, and if you moved states in 2025 the allocation rules matter.
- California taxes crypto gains as property at rates up to 13.3%. Enforcement is aggressive.
- New York conforms to federal property treatment; combined state plus NYC rates reach roughly 14–15%. BitLicense governs transmission but does not change your personal gain-loss treatment.
- Texas has no state income tax on crypto gains; mining benefits from sales-tax exemption and a ten-year abatement.
States that follow federal conformity mostly pick up the 1099-DA data automatically. States with their own digital-asset regimes do not — another reason a CPA who files in multiple states is worth the fee if you are in that situation.
Call a CPA or Enrolled Agent if any of this applies to 2025:
- You used universal basis through 2024 and sold in 2025
- You had a crypto theft, hack, or rug-pull loss you want to explore under §165(c)(2)
- You were active in DeFi (liquidity positions, wrapped assets, yield protocols)
- You moved states during the year
- You received staking rewards, airdrops, or NFT royalties
- You are self-employed and were paid in crypto
For anything beyond routine buy-hold-sell activity through a single broker, a professional is not a luxury. It is the difference between an orderly return and an IRS notice two years from now.
Part 2 covers what the IRS treats as a taxable event in crypto — including the cases that surprise people, like stablecoin-to-stablecoin swaps and the ongoing staking-timing debate from Jarrett v. United States. That is the foundation everything in Parts 3 and 4 builds on.
