Short-Term vs Long-Term Crypto Capital Gains: How Holding Period Changes Your Tax

In the United States, the single biggest lever you control over your crypto tax bill is time. Hold for more than one year and your gain moves from ordinary income rates (up to 37%) to long-term capital gains rates (0%, 15% or 20%). The difference can be thousands of dollars on a single sale.

The rule

• Short-term capital gain: asset held one year or less. Taxed as ordinary income.
• Long-term capital gain: asset held more than one year. Taxed at preferential rates.

Counting the holding period correctly

The holding period starts the day after you acquire the asset and includes the day you sell. To be long-term, you must sell at least one year and one day after purchase.

Example: bought on 15 March 2025. Selling on 15 March 2026 is still short-term. Selling on 16 March 2026 or later is long-term.

Each purchase lot has its own holding period. If you bought monthly, some lots may be long-term while others are short-term.

How much it saves

Single filer, 2026, $90,000 salary, $20,000 crypto gain:

• Taxable salary: $90,000 − $16,100 = $73,900, which sits in the 22% bracket
• Short-term: $20,000 × 22% = $4,400
• Long-term: $20,000 × 15% = $3,000
• Saving: $1,400

For a high earner in the 37% bracket, the gap between 37% and 20% is 17 percentage points — $3,400 on every $20,000 of gain.

What about the UK and Canada?

Neither the UK nor Canada has a separate long-term rate for individuals. In the UK, CGT applies at 18% or 24% regardless of how long you held the asset. In Canada, the 50% inclusion rate applies whether you held for a day or a decade — although very short holding periods are one factor the CRA considers when deciding whether trading is business income, which is fully taxable.

Strategies around the one-year mark

1. Check lot dates before selling. If a lot is a few weeks from long-term status, the tax saving may outweigh the market risk of waiting.
2. Use specific identification to sell long-term lots first when you need cash. See cost basis methods.
3. Offset short-term gains with losses. Losses are most valuable against gains taxed at the highest rates.
4. Don't let tax drive everything. Holding a falling asset for a few more weeks to save 7% in tax can backfire if the price drops 20%.

Staking and mining rewards

Rewards are taxed as income when received. The holding period for those tokens starts the day after you receive them, and the income value becomes their cost basis.

Compare both outcomes

Use the "held for more than 1 year" checkbox in the crypto tax calculator to see your tax with and without long-term treatment, using 2026 brackets.

CryptoMathly provides educational estimates only and is not financial, investment or tax advice. Crypto assets are volatile and you can lose money. Always verify figures with a qualified professional.