Do You Have to Pay Taxes on Stablecoins in 2025?

Many crypto investors wonder, “Do you pay taxes on stablecoins?” or “Do you have to pay taxes on stablecoins at all?” The short answer is yes. Although stablecoins are pegged to a commodity or currency (often the US dollar), they’re still considered property by the IRS. This means taxes on stablecoins can apply whenever you trade, convert, or earn them as income.

Recent legislative efforts, such as the Clarity for Payment Stablecoins Act, highlight a growing push to regulate stablecoins more thoroughly—which could lead to changes in how they’re taxed in coming years.

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How are stablecoins taxed?

When looking at stablecoins and taxes, you should treat them the same way you would other cryptocurrencies. Whenever you transact with a stablecoin—whether selling, trading, or paying for goods and services—you incur a taxable event if there is a gain or loss. Even though stablecoins usually fluctuate very little in price, those minor differences are technically subject to capital gains or losses.

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Is trading stablecoins for other stablecoins a taxable event?

Trading from one stablecoin to another (for example, swapping USDT for DAI) is still considered a crypto-to-crypto trade. The value difference might be slight, but a taxable event still must be reported. While you may see only a modest gain or loss, the IRS treats all crypto trades as property exchanges.

Crypto taxes on stablecoin payments or wages

If you receive stablecoins as payment for goods or services, or you’re paid wages in stablecoins, that income is taxed as ordinary income based on the fair market value at the time of receipt. You report this like you would fiat income on your tax return.

Is converting BTC to USDC a taxable event?

Yes. Converting Bitcoin, Ethereum, or any other cryptocurrency into a stablecoin triggers a taxable event. Any gain or loss on the original crypto must be calculated and reported.

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Convert crypto to stablecoin tax

Many people search for information on “convert crypto to stablecoin tax,” hoping to avoid or defer taxes by shifting into stablecoins instead of cash. However, converting crypto into a stablecoin is treated just like any other crypto disposition. You must calculate capital gains or losses based on your asset’s cost basis and the fair market value of the stablecoin received.

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How do I report stablecoin taxes on my tax return?

Once you understand how are stablecoins taxed, the reporting process comes down to proper documentation. For any trades into or out of a stablecoin, you’ll record the transaction on Form 8949, reporting any capital gain or loss. If you earn stablecoins as income—for instance, in exchange for services rendered—that income should be reported on Form 1040 Schedule 1 as “other income,” valued at the market rate of the stablecoin at the time you received it.

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What happens if a stablecoin loses value?

A stablecoin can depeg, as seen with TerraUSD (UST) in 2022. If you experience a loss in such an event, you can generally report it as you would on any other crypto asset. Doing so can potentially reduce your overall tax liability because losses can offset your gains. If a stablecoin becomes worthless, speak with a crypto tax professional or attorney to determine the best approach for claiming it as a worthless security.

Learn More: How to Report Crypto Losses on Your Taxes.

How TokenTax can help with your stablecoin taxes

Navigating taxes on stablecoins can be confusing—especially in a market where legislation keeps evolving. Whether you have questions about using stablecoins to avoid tax (which isn’t possible simply by holding stablecoins) or you need detailed guidance on tracking every trade, our crypto tax experts can simplify the process. Our personalized support and software make it easy to compile your transaction history and file accurately.

Are stablecoin sales reported to the IRS

Stablecoin sales and conversions are typically reported the same way as other crypto transactions. Exchanges and other platforms may also provide 1099 forms or similar statements to both you and the IRS, ensuring transparency in your transaction activity.

Claiming a loss if the value of my stablecoins declines

If a stablecoin loses value significantly, you may be able to claim a capital loss when you dispose of it (e.g., when selling or swapping). However, if you continue to hold the stablecoin and it becomes completely worthless, the reporting may be more complex. Consult a tax advisor for clarity on the best reporting strategy in these situations.

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The future of stablecoin taxes

Legislation like the Payment Stablecoins Act continues to move through Congress, aiming to regulate stablecoin issuers. Though at the time of writing these regulations are not final, they could shape reporting requirements and tax treatment for stablecoins in the future. It’s essential to stay informed and always check for the latest information. When in doubt, consult a crypto tax professional like ours at TokenTax.