The Tax Benefits of Holding Cryptocurrency for the Long Term

1. Capital Gains Tax Advantages

When you invest in cryptocurrency and hold it for more than a year, any profit you make upon selling is considered a long-term capital gain. In the U.S., these gains are taxed at lower rates compared to short-term gains. The rates for long-term gains are 0%, 15%, or 20%, depending on your taxable income and filing status. In contrast, short-term gains, from assets held for less than a year, are taxed as ordinary income at rates that can go up to 37%. This distinction makes long-term holding financially appealing, as the tax liability could significantly decrease.

2. Reduced Tax Complexity