What Changes for Crypto Tax in 2026? Key Rules for Global Compliance

In 2026, crypto tax changes across major economies share a defining trend for better data, not necessarily higher rates. From IRS Form 1099-DA in the United States to international data-sharing frameworks like CARF and OECD, governments worldwide are building infrastructure to track digital asset transactions with unprecedented precision.

This guide explores 2026 crypto tax changes across 7 major jurisdictions, such as the US, India, and Canada, from Form 1099-DA to CARF data sharing, including new rates, reporting requirements, and compliance strategies. 

Key takeaways

• The US rolls out Form 1099-DA for broker reporting, while 48+ countries implement CARF/DAC8 automated data sharing, creating unprecedented transaction visibility for tax authorities worldwide.

• Italy increases capital gains tax to 33%, Canada raises inclusion rates above $250K, while Japan cuts rates to 20% for qualifying assets and Brazil implements a 17.5% flat tax.

• India deploys AI-powered matching systems, the UK tightens HMRC penalties, and the US requires wallet-level basis tracking, signaling a shift from voluntary reporting to automated compliance.

• Pro-crypto legislation, including the CLARITY Act's de minimis exemption and state-level tax cuts in Missouri, Kentucky, Mississippi, and Oklahoma offer relief for everyday crypto users.

What are the important crypto tax changes globally in 2026?

For crypto investors, 2026 marks the year when voluntary compliance transitions to enforced reporting. New regulations and international data-sharing are making crypto transactions more transparent in 2026. 

Here's what you need to know about the key changes in the United States, Europe, India, Canada, Japan, and Brazil.

United States: What is IRS Form 1099-DA and how does it affect you?

The United States introduces mandatory broker reporting through Form 1099-DA, requiring exchanges to report gross proceeds for all crypto sales starting with 2025 transactions.

Form 1099-DA is arriving in 2026

The IRS finalized broker reporting rules for digital assets and Form 1099-DA is now the standard for crypto transaction reporting. Exchanges and brokers must report gross proceeds for all sales and taxable transactions occurring on or after January 1, 2025.

Investors will receive their first Form 1099-DA by February 17, 2026, covering their 2025 trading activity. However, there's a catch is that for the 2025 tax year, brokers are not required to report cost basis information. The IRS has granted transitional relief, allowing exchanges breathing room to implement tracking systems.

This creates a significant problem. Without cost basis data, the IRS may assume your basis is zero, meaning your entire sale proceeds could be treated as taxable gain. Investors must maintain detailed personal records of acquisition dates, costs, and fees to accurately complete Forms 8949 and Schedule D. You can do this using crypto tax software like Blockstats easily.

Read next: How to calculate crypto tax in U.S.

Mandatory cost basis tracking rules for covered securities acquired after Jan 1, 2026

Starting with the 2026 tax year, cost basis reporting becomes mandatory for covered securities. According to IRS regulations, a digital asset qualifies as a covered security only if it was acquired on or after January 1, 2026, and the broker provided custodial services at the time of acquisition.

Digital assets that are non-covered securities include:

• Any crypto acquired before January 1, 2026

• Assets where the broker did not provide custodial services at acquisition

• Assets transferred into the broker account from another wallet or exchange

For noncovered securities, brokers may voluntarily report basis information, but they're not required to do so. If they choose to report it and check the appropriate box, they won't face penalties for inaccuracies.

Wallet-by-wallet tracking

One of the most significant changes in 2026 involves wallet-level basis tracking. The IRS issued Revenue Procedure 2024-28, requiring taxpayers to calculate cost basis separately for each wallet or account, effective January 1, 2025.

What happens when the exchange data doesn't match your wallet records?

If you've historically pooled your crypto holdings across multiple wallets and exchanges into a single mental bucket, 2026 is where that approach creates serious problems. The default cost basis method is First-In, First-Out (FIFO), applied separately to each account.

Here's why this matters: Imagine you bought 1 BTC on Coinbase for $40,000 and another 1 BTC on Kraken for $50,000. Later, you sold 0.5 BTC from Coinbase for $60,000.

Old approach (universal wallet): Your cost basis might be calculated across all holdings, potentially using the $40,000 purchase first under FIFO, resulting in a $10,000 gain.

New approach (wallet-by-wallet): Your cost basis is strictly the Coinbase purchase at $40,000. Selling 0.5 BTC means your basis is $20,000, resulting in a $10,000 gain.

The difference becomes more pronounced with complex trading histories. Automated cost basis tracking helps reconcile discrepancies before they trigger IRS notices and audits.

• Previously, this same profit would have been tax-free

• Clear notation when moving crypto between wallets you own (non-taxable events)

• Documentation distinguishing transfers from taxable disposals

Using crypto portfolio tools that automatically document every transaction ensures your records withstand audit scrutiny.

Check out: Free crypto profit calculator →

State-level capital gains tax changes in the US

Federal tax rules dominate most crypto tax discussions, but state-level treatment can dramatically affect your actual tax liability in 2026. Several states are moving in opposite directions, some eliminating taxes to attract crypto investors, others increasing them:

• Missouri removed state income tax on capital gains beginning with the 2025 tax year. This makes Missouri exceptionally attractive for crypto investors from a state tax perspective, though federal obligations remain unchanged.

• Kentucky, Mississippi, and Oklahoma have passed legislation creating roadmaps to eliminate state income tax over the coming years.

• Washington took the opposite approach, adding a 2.9% surtax on capital gains exceeding $1 million, bringing the top rate to 9.9%. However, they also created a $278,000 standard exemption, shielding smaller investors from the base 7% rate.

Crypto investors with large realized gains can prioritize state tax strategy. State competition via tax policy means residency choice significantly impacts the total tax burden.

Pro-crypto bills are gaining momentum

Beyond the proposed Strategic Bitcoin Reserve legislation under the BITCOIN Act, several pro-crypto bills are advancing through Congress with the potential to significantly improve the tax treatment of digital assets.

The CLARITY Act stands out for its proposed de minimis exemption on small cryptocurrency transactions. If passed, this would create a threshold below which everyday crypto spending wouldn't trigger taxable events. This will allow people to buy coffee or groceries with Bitcoin without generating tax paperwork.

This change is significant because it removes a major barrier to mainstream crypto adoption and eliminates the administrative burden of tracking capital gains on numerous small purchases. Users would only report gains above the threshold, not on every small transaction.

Europe: How CARF and DAC8 enable automated crypto tax reporting

Europe and the UK implement CARF (Crypto-Asset Reporting Framework) and DAC8, creating automated data sharing across 48+ countries to increase transparency and enforcement.

OECD CARF: How 48+ countries are automating crypto information exchange

The OECD’s Crypto-Asset Reporting Framework (CARF) begins live data collection in 2026 across more than 40 jurisdictions. Exchanges are required to collect standardized user identity and transaction data, which will be shared automatically between tax authorities starting in 2027.

CARF doesn’t change how crypto is taxed. It changes how easily governments can see cross-border activity, especially when users operate across multiple countries or offshore platforms.

More than 75 countries have committed to CARF adoption, including historically low-tax jurisdictions.

UK HMRC Enforcement: Penalty updates for unreported off-chain transfers

The United Kingdom began implementing CARF-compliant regulations in 2026, requiring all crypto service providers to collect user data and submit it to HMRC. 

This creates several new compliance requirements for UK taxpayers:

• Platform registration: Every crypto exchange operating in the UK must register and report

• Automatic data sharing: Transaction histories and user information flow directly to HMRC

• Self-reporting obligations: Off-chain transfers between personal wallets still require manual reporting by taxpayers, even when exchanges can't capture them

HMRC has strengthened its penalty framework for unreported crypto activity. Penalties start at 30% of unpaid tax for careless mistakes but escalate to 100% of the tax owed for deliberate concealment. The most egregious cases may face criminal prosecution beyond financial penalties.

DAC8 mirrors CARF across the EU

The European Union implements CARF through DAC8, which extends the EU's existing tax transparency framework. DAC8 mandates that crypto exchanges and service providers collect user data throughout all EU member states, then share that information automatically between national tax authorities starting in 2027.

Like the UK approach, DAC8 is about creating complete visibility of cross-border crypto transactions throughout Europe.

Italy’s New 33% Tax Rate

Italy introduces one of the most explicit rate changes in 2026. Capital gains on crypto rise from 26% to 33%, and the prior €2,000 annual exemption is removed.

All realized gains become taxable, regardless of size. This applies to selling, swapping, or otherwise disposing of digital assets.

To soften the transition, Italy offers a re-basement option for crypto held before 2026. Taxpayers may elect to reset their cost basis to market value by paying a one-time substitute tax of approximately 14%.

For long-term holders, this can materially reduce future exposure under the higher rate. The decision depends on holding period, unrealized gains, and expected disposition timelines.

India: How does AI enforcement impact crypto tax compliance?

India maintains its strict 30% flat tax on Virtual Digital Assets (VDAs) while implementing AI-powered enforcement to match exchange data with tax returns, issuing notices for discrepancies.

The 30% flat tax and 1% TDS standards for 2026

Crypto gains in India continue to be taxed at a flat 30%, with a 1% tax deducted at source (TDS) on many transactions. Losses cannot be offset or carried forward, and deductions are limited.

Schedule VDA remains mandatory for reporting virtual digital asset activity.

Nudge Notices: How the ITD uses AI to match exchange data with returns

Indian tax authorities announced in July 2025 that they would deploy AI and a global data-sharing infrastructure to cross-reference TDS deductions from exchanges against filed income tax returns. The Income Tax Department (ITD) sends "nudge" notices when discrepancies exceed ₹1 lakh (roughly $1,200).

These AI systems analyze multiple data streams:

• KYC records from Indian crypto platforms

• 1% TDS deductions logged by exchanges

• Cross-border transaction information from CARF member countries

• Blockchain forensics identifies unreported assets

These enforcement mechanisms make it essential to track crypto transactions with precision from day one. Thousands of Indian crypto users have received enforcement notices as TDS reporting systems catch up with previously unreported activity.

Why can't you offset crypto losses in India?

India's crypto tax framework strictly prohibits loss offsetting under Section 115BBH of the Income Tax Act. VDA losses cannot offset gains from other VDAs, other income, or be carried forward. 

Only acquisition costs reduce taxable gains. This makes frequent trading costly, as losing trades offer no tax benefit against profitable ones.

Tax reform on the horizon

While India's current crypto tax structure remains strict, 2026 may mark a shift in how it's designed and applied.

The existing framework taxes crypto at a flat 30% with 1% TDS on transactions. The inability to offset losses or carry them forward creates high costs for active traders, while the 1% TDS imposes substantial burdens on both platforms and users.

However, Indian tax authorities have begun formal consultations with crypto platforms about potential modifications. Topics under discussion include rebalancing the 30% tax and 1% TDS rates, potentially allowing loss deductions, and determining how to integrate CARF protocols.

Canada: How does the new 66.7% capital gains inclusion rate work?

Canada implemented a two-tier capital gains inclusion rate system in 2026, with gains up to $250,000 taxed at 50% inclusion and amounts exceeding this threshold facing a 66.7% inclusion rate. 

The 66.7% inclusion rate: Who is Affected by the $250,000 threshold?

• Previously, half of capital gains entered taxable income. Starting January 1, 2026:

• Capital gains up to $250,000 annually maintain the 50% inclusion rate

• Gains exceeding $250,000 face a 66.7% inclusion rate

Casual investors with modest gains see minimal impact. But holders of large positions face materially higher effective tax rates. Understanding how to calculate crypto gains and losses becomes critical for tax minimization.

The two-thirds inclusion rate remains politically divisive. Parliamentary debates suggest possible modifications, including raising the threshold to $500,000 or creating CCPC exemptions. Changes might apply retroactively to the 2026 tax year.

Japan: The new 20% flat tax on crypto assets

Japan transitions from treating crypto as miscellaneous income (taxed up to 55%) to a flat 20% tax rate for specified crypto assets, representing a revolutionary change for crypto investors.

Transitioning from "Miscellaneous Income" to a 20% separate tax

Japan's 2026 tax reform introduces a flat 20% tax rate for specified crypto assets, matching stocks and investment trusts, a massive reduction for high-earning investors. 

The reduced rate applies only to specified crypto assets under Japan's Financial Instruments and Exchange Act (FIEA): 

• Bitcoin and Ethereum via registered exchanges should qualify 

• Smaller altcoins, NFTs, and unregistered platforms remain under miscellaneous income rates 

• Assets must be handled by licensed operators
  
  

Three-year loss carry-forward and new regulatory requirement

Japan's reform adds three-year loss carry-forward for qualifying crypto gains, allowing investors to offset future profits with past losses. The improved tax treatment comes with heightened regulatory requirements: insider trading regulations, mandatory disclosures for large holders, position reporting for institutions, and enhanced KYC/AML compliance.

Brazil: How the 17.5% flat tax applies to offshore crypto holdings

Brazil implements a comprehensive 17.5% flat tax on all crypto gains in 2026, eliminating the previous R$35,000 monthly exemption and requiring reporting for both domestic and offshore holdings. 

The 17.5% flat tax: Reporting assets held on foreign exchanges

Brazil completely restructured its crypto tax system for 2026. The previous framework provided monthly exemptions for gains under R$35,000 with progressive rates. Now, all net crypto gains face a flat 17.5% capital gains tax applying to:

• Brazilian and foreign exchange holdings

• Self-custody assets (hardware wallets, MetaMask) 

• DeFi positions, staking rewards, and NFT sales 

Example: R$30,000 in monthly profits now generates R$5,250 tax liability (17.5%), whereas previously this would have been tax-free. However, high-net-worth investors benefit. The previous rates of 22.5% on gains exceeding R$30 million drop to 17.5%.

Penalties for non-compliance

Brazil's Federal Revenue Service (RFB) uses artificial intelligence to analyze blockchain transactions and prevent tax evasion. Non-compliance penalties includes, alte filing, interest charges, unreported income, and repeat violations

Check out: Free crypto tax calculator →

How to prepare your crypto portfolio for 2026 automated reporting

Global tax authorities transition from voluntary self-reporting to automated, enforced disclosure systems, requiring investors to maintain comprehensive documentation and use specialized tracking tools.

Why crypto tax Reporting shifted from voluntary to mandatory in 2026

The universal theme across major jurisdictions in 2026 is transitioning from voluntary self-reporting to enforced automated disclosure. Previously, crypto investors could choose whether to report, relying on limited government visibility.

That era has ended. Form 1099-DA in the US, CARF across 48+ countries, and AI enforcement in India give tax authorities comprehensive transaction visibility.

This shift carries profound implications:

• Compliance assumption: Authorities assume you owe tax unless you prove otherwise with detailed records

• Cross-border visibility: Foreign exchanges no longer enable tax avoidance

• Retroactive enforcement: Some jurisdictions issue notices for unreported prior-year activity using newly available data

Crypto taxes clearer in 2026

Every major jurisdiction reaches a clear inflection point in 2026 for crypto taxation. Governments are not universally hiking rates, but they have the infrastructure to enforce existing rules, leaving less margin for error. While countries like Japan and Brazil simplify taxes, the US and India discuss reforms for practical crypto use. The bottom line is that cryptocurrency taxes are becoming clearer, not harsher.

With direct exchange reporting and cross-border data sharing now standard, accurate record-keeping across wallets and jurisdictions is vital. Blockstats ensures compliance by automatically tracking transactions, calculating gains/losses, and generating required tax reports. Offering 500+ exchange/wallet support, historical pricing, and AI optimization, Blockstats streamlines complex global compliance.

Start your free tax report today and understand exactly what you owe before filing season arrives. No credit card required, complete tax picture in under 60 seconds.

Use Blockstats for crypto tax 

Manual crypto tax tracking no longer works for most investors. Wallet-level basis tracking, cross-exchange histories, and international reporting requirements demand automation.

Crypto tax software like Blockstats provides essential functionality for 2026 compliance. Blockstats' AI-powered analytics identify tax-saving opportunities like loss harvesting, minimizing tax burden while maintaining full regulatory compliance.

Frequently asked questions

Does the IRS know about my decentralized exchange (DEX) trades in 2026?

Form 1099-DA does not cover DEX trades, as decentralized exchanges are not brokers under IRS regulations. However, blockchain forensics allow the IRS to analyze on-chain transactions. Additionally, if you move funds between a CEX and a DEX, the CEX reports your activity, creating a trail.

Can I carry forward crypto losses to 2026 in Japan or the UK?

In Japan, the new three-year loss carry-forward applies only to specified crypto assets taxed at the 20% flat rate. In the UK, crypto losses can be carried forward indefinitely to offset future capital gains. Understanding how FIFO and LIFO affect your crypto tax liability helps maximize carry-forward benefits.

What is the penalty for not reporting crypto in India or Brazil?

India: 50-200% of tax evaded plus potential imprisonment up to 7 years for under-reporting; TDS non-compliance can result in penalties equal to 100% of the TDS due. Brazil: Daily fines of 0.33% capped at 20%, plus interest charges; unreported amounts face fines of BRL 1,500 to 3% of value.

Is there any country where crypto remains tax-free in 2026?

Several countries still offer zero or low crypto taxes: UAE (0% for individuals), Portugal (tax-free for holdings over 1 year), Germany (tax-free after 12 months), Singapore (0% capital gains for individuals), and El Salvador (Bitcoin gains tax-free). However, even these countries now participate in CARF data sharing, meaning transactions are still reported to authorities.