Handing crypto to another person is not a sale, so you owe no capital gains tax on the gift, but the coins' tax history travels with them. Below we cover when a gift needs a gift tax return, what basis the recipient takes over, the special rule for coins gifted at a loss, how charity deductions and appraisals work, and what changed for donors in 2026. New to crypto itself? Start with the crypto hub.
Is giving crypto as a gift taxable?
For income tax, no: the giver reports no gain and the recipient has no income, though gifts above the yearly limit bring gift tax paperwork for the giver.
The IRS treats crypto as property, and its gift tax rules cover digital assets just as they cover cash or shares. The giver, not the recipient, handles any return and pays any tax. The annual exclusion for 2026 is $19,000 per recipient, and you can give that much to as many people as you like without filing.
Above the exclusion, the excess is a taxable gift, yet tax is rarely due. The excess draws down a lifetime allowance, $15,000,000 per person in 2026, that also protects your estate, and gift tax is owed only once it runs out. Gifts to a spouse who is a US citizen are unlimited; a spouse who is not a citizen can receive $194,000 a year before a return is needed.
A gift's value is the coins' fair market value at the date and time the transfer happens. Two transfers are not pure gifts: selling coins to a relative below their value is treated as part sale and part gift, and paying someone in crypto for work or goods is a disposal by you and income for them. Gift tax on money sent abroad covers relatives in other countries, tuition and medical payments, and spouses who aren't citizens in more depth.
When does a crypto gift need Form 709?
You file Form 709 when gifts to one person in a year pass the annual exclusion, when you split gifts with a spouse, or when you give a future interest.
The table shows common cases for gifts made in 2026.
| Gift made in 2026 | Form 709? | Gift tax owed? |
|---|---|---|
| 0.1 BTC worth $9,000 to a niece | No | No |
| $25,000 of ether to one child | Yes, for the $6,000 above the exclusion | Only if lifetime taxable gifts have used up the allowance |
| $36,000 of one spouse's bitcoin, split with the other spouse by election | Yes, to make the election, though each half is under the exclusion | No |
| Any amount to a spouse who is a US citizen | No | No |
| $250,000 of crypto to a spouse who is not a citizen | Yes, for the amount above that spouse's limit | Only if lifetime taxable gifts have used up the allowance |
| Coins put in a trust that delays the beneficiary's access | Yes, at any amount, since a future interest gets no exclusion | Only if lifetime taxable gifts have used up the allowance |
For gifts made in 2026, the return is due April 15, 2027. An income tax extension on Form 4868 carries Form 709 along with it, and Form 8892 extends the gift return alone. The 2025 form also asks, on line 21, whether any transfer it reports includes a digital asset, and that question can't be left blank.
Valuing the gift is the giver's job. Keep a record of the coin price when the transfer confirms, where that price came from and the transaction ID, and hand the recipient a note listing your purchase date and cost for each unit given. That note matters more to the recipient than the return does to you, as the next section shows.
What cost basis does the recipient of gifted crypto get?
The recipient generally keeps the giver's cost basis and holding period, a rule called carryover basis, so tax on the giver's gain is postponed rather than erased.
Section 1015 of the tax code adds to that basis a share of any gift tax the giver actually paid, limited to the part of the tax that relates to the coins' rise in value. Because the holding period carries over too, a recipient who sells soon after the gift still gets long-term treatment if the giver held the coins for more than a year. The IRS adds two warnings in its digital asset FAQs: if the recipient can't document the giver's basis, the basis is zero, and without proof of the giver's holding period, the clock starts the day after the gift.
For 2026, long-term rates are 0% up to $49,450 of taxable income (single) or $98,900 (married filing jointly); 15% above that; 20% above $545,500 (single) or $613,700 (joint). That is why some families give appreciated coins to relatives with lower incomes, who may owe less on the same gain. The kiddie tax limits this for children: unearned income above a small yearly amount can be taxed at the parent's rate for anyone under 18, and for many 18-year-olds and full-time students under 24 whose earnings don't cover half their support.
Worked example: Moving a gain to a lower tax bracket
A father bought 0.5 BTC in 2019 for $4,500. In March 2026, with the coins worth $45,000, he gives them to his 30-year-old daughter, a single filer with $30,000 of other taxable income. Her basis is his $4,500, and his seven years of ownership count as hers.
In December she sells for $48,000, a long-term gain of $43,500. The first $19,450 of the gain fits under the 0% ceiling for single filers, and the remaining $24,050 is taxed at 15%: about $3,608. Had the father sold at the same price, at a 15% rate he would have owed $6,525.
The gift was $26,000 above the annual exclusion, so he files Form 709 by April 15, 2027, and owes no gift tax.
If the recipient later sells only some of the gifted coins, the lot rules in crypto cost basis methods decide which units, and which basis, leave first. Crypto tax 101 covers how short- and long-term gains are taxed. Coins received at death are treated differently, with the basis reset to the value on the date of death; see crypto inheritance planning.
How does the dual-basis rule work for crypto gifted at a loss?
If coins are worth less than the giver paid, the recipient measures a gain from the giver's basis and a loss from the lower value on the gift date.
A sale at any price between those two figures produces neither a gain nor a loss. The rule stops people from handing an unused loss to someone who could deduct it, and in practice it means the drop that happened before the gift belongs to no one.
Worked example: Ether gifted below its cost
An aunt bought 2 ETH for $9,000 and gives them to her nephew when they are worth $5,000, well under the annual exclusion, so no return is needed. His basis is $9,000 for measuring a gain and $5,000 for measuring a loss.
| Nephew's sale price | Basis that applies | Result |
|---|---|---|
| $10,000 | $9,000 | $1,000 gain |
| $7,000 | Neither | No gain or loss |
| $4,000 | $5,000 | $1,000 loss |
Had the aunt sold the coins for $5,000 and given him the cash, she could have used the $4,000 loss against her own capital gains, deducting any excess at up to $3,000 a year against ordinary income ($1,500 if married filing separately).
Gifts between spouses skip the dual-basis rule. Under section 1041, the receiving spouse keeps the giver's basis for gains and losses alike, unless that spouse is a nonresident alien. Selling a fallen coin yourself, rather than giving it away, keeps the loss usable; crypto tax-loss harvesting explains how realized losses offset gains.
How do you deduct crypto donated to charity?
If you itemize and have held the coins for more than a year, you can generally deduct their fair market value and owe no tax on the gain.
The IRS says a donation to a qualifying charity triggers no gain or loss for you. For coins held a year or less, the deduction drops to your basis or the value, whichever is lower. Network fees you pay to move the coins are not part of the deduction in either case.
Limits depend on who receives the gift. Long-held crypto given to a public charity, including a donor-advised fund, is deductible up to 30% of your AGI a year, and any excess carries forward for up to five years. Gifts to most private foundations are capped at 20% of AGI and, because crypto is not stock, are generally deductible only at your basis.
Paperwork grows with the size of the deduction:
| Deduction claimed for the gift | What you need |
|---|---|
| $250 or more | A written acknowledgment from the charity, obtained before you file |
| More than $500 | Form 8283, Section A, attached to your return |
| More than $5,000 | Form 8283, Section B, a qualified appraisal and the charity's signature on the form |
| More than $500,000 | All of the above, plus a copy of the appraisal attached to the return |
The Form 8283 instructions apply the $5,000 test to an item or a group of similar items for the year, even if they went to different charities, so several smaller crypto gifts can add up.
The appraisal rule trips up more crypto donors than any other. In a 2023 Chief Counsel memo, the IRS concluded that a donor who valued a $10,000 crypto gift at an exchange's quoted price had no qualified appraisal and no reasonable cause, so the entire deduction was denied. Such memos can't be cited as precedent, but they show how the agency reads the rule. A qualified appraiser must sign the appraisal no earlier than 60 days before the gift, and you need it in hand before your return is due, including extensions. The charity's signature on Form 8283 confirms that it received the coins, not what they were worth, and if it sells them within three years it files Form 8282 and sends you a copy.
Worked example: Giving coins versus selling them first
A single filer with $180,000 of AGI who itemizes gives a public charity 0.25 BTC in 2026. She bought it in 2022 for $6,000, and it is now worth $22,000. She gets a qualified appraisal, and the charity signs her Form 8283.
Her deduction is $22,000 minus the 0.5% floor of $900, or $21,100, far under the 30% limit of $54,000. She owes nothing on the $16,000 gain.
If she sold first and gave the $22,000 in cash, the gain would cost $2,400 in tax at 15%, and her higher AGI of $196,000 would lift the floor to $980, cutting the deduction to $21,020. Giving the coins directly saves that $2,400 and keeps $80 more of deduction, though she pays for the appraisal.
What changed for crypto donations in 2026?
Starting with 2026 returns, itemizers lose the first 0.5% of AGI in charitable gifts, top-bracket filers get less per deducted dollar, and non-itemizers gain a small cash-only deduction.
All three changes come from the One Big Beautiful Bill Act, Public Law 119-21, signed on July 4, 2025, which IRS pages now call the Working Families Tax Cuts. They apply to tax years beginning after December 31, 2025.
The 0.5% floor. Charitable gifts count only to the extent your total for the year exceeds 0.5% of your AGI. The law takes the floor out of gifts of appreciated property, such as long-held crypto, before cash, which matters when you give both. An amount lost to the floor carries forward only in a year when your gifts also exceed one of the AGI limits; otherwise it is gone.
Worked example: How the 0.5% floor falls on a crypto gift
A married couple with $300,000 of AGI files jointly and itemizes in 2026. They give a public charity $10,000 of ETH held for three years and $2,000 in cash. The floor is $1,500, and it comes out of the ETH first: they deduct $8,500 for the coins and $2,000 for the cash, $10,500 in all, against $12,000 under the 2025 rules. Their gifts are far below the AGI limits, so none of the $1,500 carries forward.
The top bracket. For filers in the 37% bracket, a rewritten section 68 trims itemized deductions by 2/37 of the smaller of those deductions or the income that reaches into that bracket. In effect, each deducted dollar saves at most about 35 cents.
Non-itemizers. The 2026 standard deduction is $16,100 for single filers and married people filing separately, $24,150 for heads of household and $32,200 for married couples filing jointly. Filers who take it can now also deduct up to $1,000 of cash given to qualifying public charities, or $2,000 on a joint return, and the 0.5% floor does not apply. Gifts to donor-advised funds and supporting organizations don't count, and neither does any gift of property, crypto included. Selling coins and giving the cash would qualify, but the sale is a taxable disposal in its own right.
Since the floor applies every year, some donors bunch several years of giving into one, sometimes through a donor-advised fund, so the floor bites once and the total clears the standard deduction.
What are the risks of gifting or donating crypto?
The main risks are lost records, a deduction denied over paperwork, price swings around the transfer, mistakes in sending coins and rules that keep changing.
- Missing basis records. Without proof of what the giver paid, the IRS treats the recipient's basis as zero, so the whole sale price can become taxable gain.
- A denied deduction. Claiming more than $5,000 without a qualified appraisal can cost the entire deduction, as the 2023 memo shows, and an exchange screenshot is no substitute.
- Volatility. Crypto is volatile and can lose most or all of its value. Form 709 and the charity deduction lock in the value on the transfer date, while a recipient who holds the coins bears every later move; the live bitcoin price shows how far that can go in a few weeks.
- Transfer mistakes. Coins sent to a wrong address or network may be gone for good, so confirm the recipient's address through a second channel and send a small test first; sent crypto to the wrong network covers what can be recovered. A recipient new to crypto also needs a safe place to keep it, which how to store crypto safely explains.
- Groups that don't qualify. A gift to an organization that isn't a qualifying charity earns no deduction, so check its status in the IRS Tax Exempt Organization Search before giving; crypto scams covers the impersonation tricks that target donors and investors.
- Rule changes. Gift and charitable rules change, as 2026 shows, and dollar amounts adjust each year. Check current IRS guidance for the year you give, and consider a tax professional before large gifts, gifts to minors or trusts, and donations that need an appraisal.