Understanding the 28% Short‑Term Tax on Crypto Gains

When working with 28% short-term tax, the tax rate applied to profits earned from crypto assets held less than a year. Also known as short‑term capital gains tax, it forces traders to treat rapid flips like ordinary income. In most jurisdictions that rate sits alongside the regular income tax brackets, meaning every dollar you earn from a quick sale adds to your taxable earnings. This rule shapes how you plan trades, set profit targets, and decide whether to hold or sell.

One of the core concepts tied to that rate is crypto capital gains, the profit made when you sell or swap cryptocurrency for more than you paid. Short‑term gains are those realized in under 12 months, and they trigger the 28% rule instead of the lower long‑term rate. Knowing the difference helps you decide if a trade is worth the tax bite or if you should wait for the long‑term window to open.

Calculating these numbers by hand quickly turns messy, which is why many turn to tax filing software, online tools that help you calculate and report crypto taxes automatically. Programs like CoinTracker or Koinly pull transaction data from wallets and exchanges, classify each move as short‑ or long‑term, and spit out a tax‑ready spreadsheet. Using such a tool saves you hours of spreadsheet gymnastics and reduces the chance of a mis‑reported figure that could trigger an audit.

Beyond the math, staying on the right side of the law means mastering regulatory compliance, the process of meeting legal requirements set by tax authorities for crypto transactions. In practice that means keeping every trade receipt, noting the date, price, and fees, and storing the data for at least the period demanded by your tax authority. Many countries now require you to disclose even small swaps, so a disciplined record‑keeping habit is non‑negotiable.

Putting all that together, a typical workflow looks like this: first, export CSV files from every exchange you used during the tax year. Next, import them into your chosen tax filing software, which will flag which trades fall under the 28% short‑term bucket. Then, review the generated report, double‑check that cost‑basis calculations reflect any fee deductions, and finally upload the figures into your annual tax return. If you miss a single trade, you could end up under‑paying and face penalties later.

Common pitfalls include forgetting to include internal wallet transfers, ignoring fee adjustments, and treating token airdrops as free money. Airdrops, for example, are usually taxable at market value the day you receive them, and any subsequent sale will add to your short‑term gain if you flip it within a year. Another trap is overlooking the “wash‑sale” rule that some jurisdictions apply to crypto, which can prevent you from claiming a loss if you repurchase the same asset shortly after selling.

Looking ahead, many tax agencies are drafting clearer guidance on crypto reporting, and some are even building APIs that let exchanges push transaction data directly to the authorities. That means the gap between what you report and what the regulator sees will shrink, making accurate record‑keeping even more critical. Meanwhile, a handful of jurisdictions are experimenting with lower short‑term rates to attract traders, so staying informed could save you a sizable chunk of your earnings.

Now that you’ve got the fundamentals of the 28% short-term tax rule, the tools to calculate it, and the compliance checklist to avoid headaches, the articles below dive deeper into specific tokens, exchange reviews, and real‑world case studies. Browse the collection to see how these concepts play out across different markets, from emerging airdrops to seasoned exchange platforms.