Quick answer
In most countries that tax crypto, yes. Selling coins for money, spending them, turning them into a gift card or swapping them for another coin usually counts as disposing of them, and the tax falls on the gain: what the coins were worth when you gave them up, minus what they cost you and any allowed fees. Crypto received as pay is taxed as income first. This is general information, not tax advice.
That's the tax side of a cashout, and it's one part of is cashing out crypto safe?, which covers scams and privacy too.
Below: which moves are taxable, a worked gain with real fees, the US rates for 2025 and 2026, the UK allowance, and the records that make tax time easy.
One plain line before we start: this is general information, not tax advice. Your own country's rules and a qualified adviser decide what you owe.
Do you owe tax when you cash out crypto?
Usually, yes. Turning crypto into money counts as selling it, and a sale at a profit is taxable in the US, the UK and most other countries that tax crypto.
The tax isn't on the whole payout, though. It's on the gain, the part above what the coins cost you. Cash out close to your buying price and the taxable amount can be small, or nothing.
Which crypto moves are taxable, and which aren't?
Tax usually applies when you give crypto up or get it as pay. Buying with money and holding is normally not a taxable moment.
A payout to a bank, PayPal, Cash App or cash pickup sells the coins at that day's value.
Paying for something, or taking a gift card, phone top-up or virtual Visa, is treated like a sale.
Bitcoin into USDT disposes of the Bitcoin, even though no money moved.
Coins received for work count as income at their value on the day they arrive.
No gain is made until you give the coins up.
In the US, paying the network fee in crypto can itself count as a small disposal.
| Zilligo payout | What the tax office usually sees | Value to record |
|---|---|---|
| PayPal, Cash App, Venmo, Wise and other wallets | A sale of the coins for money | The value of the coins you sent, in your currency |
| ACH, SEPA, Chime and other banks | A sale of the coins for money | The same |
| Amazon, Steam and other gift cards, the virtual Visa, top-ups | Spending the coins | The same |
| Western Union, MoneyGram | A sale of the coins for cash | The same |
The payout type rarely changes the tax: every one of them disposes of the coins you sent.
One trap catches a lot of people. Swapping into a stablecoin is not a pause button. If your Bitcoin rose and you swap it for USDT, the gain on the Bitcoin usually counts that day.
How do you work out the gain on a cashout?
Take the value of the coins you gave up, subtract what they cost you and any fees your rules allow, and what's left is the gain. A negative result is a loss.
Example: A $1,000 PayPal payout, paid in Bitcoin
Illustrative numbers. The Zilligo fee sits on top of the payout, so $1,015 of Bitcoin pays $1,000 to PayPal. The wallet's network fee is left out to keep the sums simple.
Where the $1,015 of Bitcoin went, for tax purposes
- Your cost basis coming back$606
- Zilligo fee$15
- Taxable gain$394
- Value of the Bitcoin sent$1,015
Bought the same coin several times? Your country decides which purchase you're selling, and that changes the gain:
| Country | Which coins count as sold |
|---|---|
| United States | The units you can specifically identify; otherwise the earliest bought go first. Since 1 January 2025, this is tracked wallet by wallet or account by account. |
| United Kingdom | Coins bought the same day are matched first, then coins bought in the next 30 days, then an average cost pool for each token. |
From the IRS virtual currency FAQ (questions 39 and 41), IRS rules for 2025 onwards, and HMRC's cryptoasset guidance.
How does the US tax a short or long-term gain?
Held one year or less, the gain is short-term and taxed like wages. Held more than one year, it's long-term and taxed at 0%, 15% or 20%, depending on your taxable income.
The clock starts the day after you get the coins. A coin bought on 10 March 2025 and sold on 10 March 2026 is still short-term; sell it from 11 March 2026 and it's long-term.
| Long-term rate | Single filer, 2025 | Single filer, 2026 | Married filing jointly, 2026 |
|---|---|---|---|
| 0% | Taxable income up to $48,350 | Up to $49,450 | Up to $98,900 |
| 15% | Up to $533,400 | Up to $545,500 | Up to $613,700 |
| 20% | Above $533,400 | Above $545,500 | Above $613,700 |
2025 from IRS Topic 409; 2026 from Revenue Procedure 2025-32. Thresholds use total taxable income, not just the gain. Short-term gains use ordinary income rates of 10% to 37%.
Federal tax on the $394 gain from the example
Losses work the other way. A net capital loss can cut ordinary income by up to $3,000 a year ($1,500 if married filing separately), and the rest carries forward to later years.
What is Form 1099-DA, and does it change what you report?
Form 1099-DA is the IRS form on which brokers report your crypto sales. It's a report about you, not a tax bill, and your duty to report doesn't depend on getting one.
- 1 January 2025Proceeds reporting starts
Brokers must report gross proceeds for sales from this date.
- Early 2026First forms arrive
The 2025 forms show what you sold for, often without what you paid.
- 1 January 2026Basis reporting starts
Brokers must also report cost basis on certain sales from this date.
- Every yearThe question on Form 1040
Everyone filing answers Yes or No to whether they received, sold, swapped or otherwise disposed of digital assets.
Who sends one? Brokers that take possession of the coins you sell: custodial trading platforms, certain hosted wallet providers, crypto kiosks and certain payment processors. Non-custodial services are left out.
How does the UK tax crypto you cash out?
Capital Gains Tax applies when you dispose of crypto, and the first £3,000 of total gains each tax year is tax-free. Above that, gains are taxed at 18% or 24% depending on your income.
| Rule | 2025 to 2026 | 2026 to 2027 |
|---|---|---|
| Tax-free allowance | £3,000 | £3,000 |
| Rate within the basic rate band | 18% | 18% |
| Rate for higher and additional rate taxpayers | 24% | 24% |
| Tax year | 6 April 2025 to 5 April 2026 | 6 April 2026 to 5 April 2027 |
GOV.UK, Capital Gains Tax rates and allowances, updated 13 April 2026. The 18% and 24% rates have applied since 30 October 2024.
Example: A UK seller with £5,000 of crypto gains in 2026 to 2027
Illustrative. Which rate applies depends on your taxable income for the year; part of a gain can fall in each band.
HMRC counts selling, swapping, spending and giving crypto away as disposals, with gifts to a spouse, civil partner or charity excluded. Transaction fees are allowable costs. You report on a Self Assessment return, which has had a cryptoasset section since 2024 to 2025, or through the real time Capital Gains Tax service.
HMRC also sees more than it used to. Since 1 January 2026, crypto service providers in the UK must collect customers' names, addresses, tax residence and tax numbers under the Cryptoasset Reporting Framework, and report them to HMRC.
What if you pay tax somewhere else?
Check your own tax authority's rules, because they vary a lot. A few countries tax only a share of the gain, some reward holding longer, and some treat frequent trading as a business.
| Country | What the tax authority says |
|---|---|
| Canada | Half of a capital gain is taxable income. If your crypto activity is a business, the full profit is taxed instead (CRA). |
| Australia | A 50% discount on the gain if you held the crypto at least 12 months and you're an Australian resident. The ATO flags changes for gains made from 1 July 2027, so check its current page. |
| Everywhere else | Look up your tax authority's crypto guidance, and check the date on it. |
Short summaries of official guidance, checked 3 November 2026. Rules change, often yearly.
Questions to answer for your own country
- Does selling or spending crypto count as a disposal?
- Is there a yearly tax-free allowance on gains?
- Does holding longer lower the rate or the taxable share?
- Which purchase counts as sold: oldest first, average cost or your choice?
- When does the tax year start and end, and when is the filing deadline?
- Is frequent trading taxed as income instead of gains?
Moved country while holding coins? That's the case where professional advice pays for itself. Our countries page shows which Zilligo payouts work where you live now.
What records should you keep for each cashout?
Keep one record for each time you get crypto and one for each time you give it up. With those, tax time is subtraction, not detective work.
Keep for every coin
- The date you got it, how many, what it cost in your currency and any fee.
- For crypto received as pay, the date and its value that day.
- For each sale, spend or swap: date, coin, amount, value received and fees.
- Transaction IDs from your wallet or exchange.
- Transfers between your own wallets, so you can show the coins stayed yours.
- Statements showing the payout landing in your bank, PayPal or other account.
Each Zilligo order has its own page with the reference, coin, network, amount sent and payout. Save it once the status reads Payout sent, and keep it with the statement where the money arrived.
1,010.00USDT on Tron (TRC-20)- Send crypto
- Confirming
- Payout sent
Payout: $1,000.00 to your US bank by ACH
Lost a few order pages? Signed in, you can download your orders from your account's profile and security page. Zilligo keeps order records for 5 years, as its privacy policy explains, but your tax office may want records for longer, so keep your own copy.
When is it worth paying for tax advice?
When the amount is large, your history is messy or you were paid in crypto, a session with an accountant usually costs less than the mistake it prevents.
Knowing the tax before you sell lets you plan the timing.
Income and gains both apply, sometimes on the same coins.
Matching rules across wallets get hard to do by hand.
Two tax systems may each claim part of the gain.
An adviser can help rebuild cost basis from old statements.
These are often taxed as income when received.
Planning a large sale? Large amounts covers the practical side, and the limits page shows how much each payout takes per order. Want the details of a sale to stay private from strangers? See anonymous crypto payments.
Now it is your turn
A cashout usually counts as a sale, and the tax lands on the gain, not on the whole payout.
Know your cost basis, save every order page, and read your own tax office's rules before a big sale.
Which record will you start keeping from your next cashout on?
Start a cashoutFrequently asked questions
Do I pay tax on the whole amount I cash out?
Usually not. Only the gain is taxed: what the coins were worth when you gave them up, minus what they cost you and any allowed fees. Crypto received as pay is different, since its value is income when it arrives. General information, not tax advice.
Is a gift card or virtual Visa payout taxed differently from a bank payout?
Usually not. Taking a gift card, top-up or prepaid card for crypto counts as spending the coins, so the same gain rules apply as for a payout to your bank.
What if I cash out at a loss?
There's no gain to tax on that sale, and the loss can usually reduce other gains. In the US, a net loss can also cut ordinary income by up to $3,000 a year, with the rest carried forward.
Are small cashouts tax-free?
Not automatically. The UK only taxes total gains above £3,000 a year, but many countries have no allowance, and in the US every disposal is reportable whatever its size.
I didn't get a Form 1099-DA. Do I still have to report?
Yes. The IRS says you must report digital asset transactions whether or not you get a form and whether or not they produce a gain or loss.
Is swapping Bitcoin for USDT taxable even if I don't cash out?
In the US and the UK, yes. A swap disposes of the Bitcoin, so any gain on it counts at the moment of the swap.
Does Zilligo give tax advice or work out my gains?
No. Zilligo gives you an order page for each cashout and keeps order records for 5 years, which you can download from your account. Working out and reporting your tax is up to you and your adviser.
Sources
- Digital assetsInternal Revenue Service (IRS)
- Frequently asked questions on virtual currency transactionsInternal Revenue Service (IRS)
- Topic no. 409, Capital gains and lossesInternal Revenue Service (IRS)
- Revenue Procedure 2025-32 (2026 inflation adjustments)Internal Revenue Service (IRS)
- Check if you need to pay tax when you sell cryptoassetsHM Revenue and Customs (GOV.UK)
- Capital Gains Tax: rates and annual tax-free allowancesHM Revenue and Customs (GOV.UK)
- CRYPTO10410: Cryptoasset Reporting FrameworkHMRC Cryptoassets Manual (GOV.UK)
- Reporting income from crypto-asset transactionsCanada Revenue Agency
- CGT discountAustralian Taxation Office
