New York Crypto Tax Services

New York Crypto Tax: Key Facts

New York's tax treatment of cryptocurrency follows federal guidelines but applies the state's high progressive rates. Here are the essential facts:

• State Tax Rates: 4% to 10.9% on all income including crypto gains

• NYC Resident Tax: Additional 3.078% to 3.876% for New York City residents

• No Long-Term Preference: All capital gains taxed as ordinary income at state level

• Combined Rates: NYC residents can face combined state/local rates exceeding 14.7%

• Property Treatment: Crypto classified as intangible property, not currency

• Official Guidance: TSB-M-14(5)C provides comprehensive state tax treatment

• BitLicense Required: Businesses need DFS license for crypto activities

 

Cryptocurrency Taxation in New York: Key Challenges

New York imposes some of the highest combined tax rates in the nation on cryptocurrency gains. Between state income tax (up to 10.9%), New York City resident tax (up to 3.876%), and the Metropolitan Commuter Transportation Mobility Tax, crypto investors in the New York metro area face substantial state and local tax burdens on top of federal taxes.

 

Combined Maximum Rates

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At Monaco CPA, we specialize in helping New York crypto investors navigate this complexity. Based in neighboring New Jersey, we serve clients throughout the New York metro area including Manhattan, Brooklyn, Queens, Long Island, and Westchester County.

 

2025 Regulatory Changes Affecting New York Crypto Investors

Federal regulatory changes add new compliance layers for New York taxpayers. When exchanges report to both the IRS and New York State Department of Taxation and Finance, any discrepancy will trigger notices from both authorities.

 

Wallet-by-Wallet Cost Basis Tracking (Effective January 1, 2025)

Revenue Procedure 2024-28 requires calculating gains and losses separately for each wallet or account. FIFO (First-In, First-Out) is now the default method unless you make specific identification elections. Notice 2025-7 provides temporary relief through 2025, allowing HIFO/LIFO through your own records even if brokers can't accept specific instructions yet.

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Form 1099-DA Implementation

Custodial brokers report gross proceeds for 2025 transactions on the new Form 1099-DA. Cost basis reporting becomes mandatory for assets acquired on or after January 1, 2026. New York receives this data through federal information sharing agreements.

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DeFi Broker Rule Repealed

Public Law No. 119-5 (April 2025) means decentralized platforms won't report your activity. However, your New York crypto tax obligations remain unchanged—the state expects you to report all gains regardless of whether you receive a 1099.

 

New York State Crypto and Capital Gains Tax Rules

New York's tax treatment of cryptocurrency aligns closely with federal rules—virtual currency is treated as property. This conformity means every sale, trade, or use of crypto is a taxable transaction under both federal and New York law.

 

New York State Income Tax Rates (2025)

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No Long-Term Capital Gains Preference

Unlike federal tax, New York does not offer preferential rates for long-term capital gains. Whether you held your crypto for one day or ten years, gains are taxed at the same ordinary income rates shown above.

NYC Resident Tax (Additional)

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Capital Gains Calculation

To calculate capital gains on cryptocurrency in New York:

1. Determine your cost basis (purchase price plus fees)

2. Subtract cost basis from sale proceeds or fair market value

3. Report gain/loss on Form IT-201 (residents) or IT-203 (part-year/nonresident)

 

New York's Official Crypto Tax Guidance

New York is one of few states to issue comprehensive cryptocurrency tax guidance. Technical Service Bulletin TSB-M-14(5)C, (7)I, (17)S (December 2014) confirms:

• Cryptocurrency is treated as property, not currency

• Barter exchange principles apply to crypto transactions

• Fair market value at time of transaction determines tax basis

• All gains are taxable regardless of whether converted to USD

 

BitLicense Requirements

New York's Department of Financial Services (DFS) requires a BitLicense (23 NYCRR Part 200) for businesses engaging in virtual currency activities. This is the first and most comprehensive state crypto regulation, effective since June 24, 2015.

BitLicense Facts

• Minimum Bond: $500,000 surety bond required

• Licensed Entities: 32+ companies including Coinbase, Gemini, PayPal, Robinhood Crypto

• Greenlisted Coins: Pre-approved coins include BTC, ETH, GUSD, USDP, PYUSD, RLUSD

• 2025 Update: September 2025 guidance updated custodial structure requirements for insolvency protection

Note: Individual investors do not need a BitLicense. This requirement applies to businesses providing crypto services to New York residents.

 

Taxable Crypto Transactions

Every crypto transaction can have tax consequences under New York law. When crypto is used to purchase goods or services, New York treats it as a taxable transaction.

Taxable Events

• Selling crypto for USD or other fiat currency

• Trading one cryptocurrency for another

• Using crypto to purchase goods or services (sales tax may also apply to goods)

• Receiving crypto as payment (ordinary income at FMV)

• Mining rewards when received

• Staking rewards when you have dominion and control

• Airdrops and hard forks when received

 

Sales Tax Considerations

When cryptocurrency is used to purchase taxable goods or services, New York sales tax applies to the value of the goods/services—the same as if paid with cash. The crypto transaction itself is not subject to sales tax, but the underlying purchase may be.

 

Tax Planning Strategies for New York Investors

Given New York's high rates, strategic tax planning is essential for crypto investors.

Tax-Loss Harvesting

New York follows federal treatment—cryptocurrency is not subject to wash sale rules. You can sell crypto at a loss and immediately repurchase to realize the loss while maintaining your position. Given New York's high rates, harvested losses are particularly valuable.

 

Long-Term Holding

While New York doesn't offer preferential state rates for long-term gains, federal rates drop significantly (from up to 37% to up to 20%). Holding crypto over one year saves substantial federal taxes even with New York's flat treatment.

 

Residency Planning

Some investors consider relocating to lower-tax states before realizing significant gains. Moving outside NYC eliminates the 3.876% city tax; moving outside New York entirely eliminates the 10.9% state tax. However:

• New York aggressively audits departing residents

• Gains realized while a NY resident are taxable to NY

• Proper documentation of residency change is essential

 

Charitable Donations

Donating appreciated cryptocurrency to qualified charities can provide significant tax benefits:

• Deduct fair market value if held over one year

• Avoid recognizing capital gains on donated crypto

• Subject to AGI limitations (generally 30% for appreciated property)

 

Services for New York Crypto Investors

• NY State and NYC Tax Return Preparation: Complete Form IT-201 (resident) or IT-203 (part-year/nonresident) with proper crypto gain reporting

• Federal Return Coordination: Integrated federal and state preparation ensuring consistency

• Transaction Reconciliation: Rev. Proc. 2024-28 compliant wallet-by-wallet tracking

• Form 1099-DA Matching: Reconciling exchange-reported data to prevent state and federal notices

• Tax-Loss Harvesting: Strategic loss realization to offset gains

• Residency Change Planning: Guidance for investors considering relocation

• Audit Defense: Representation before IRS and NY State Department of Taxation

• Estimated Tax Planning: Quarterly projections to avoid underpayment penalties

 

Areas We Serve in New York

From our New Jersey office, we serve crypto investors throughout the New York metropolitan area:

• New York City: Manhattan, Brooklyn, Queens, Bronx, Staten Island

• Long Island: Nassau County, Suffolk County

• Hudson Valley: Westchester, Rockland, Orange, Putnam Counties

• Upstate: Albany, Buffalo, Rochester, Syracuse areas

 

All services delivered remotely via secure portal, video consultation, and phone—no office visit required.

 

Frequently Asked Questions

I live in NYC but work remotely for a company outside NY. How does this affect my crypto taxes?

Your crypto gains are taxed based on residency, not employer location. As a NYC resident, you owe NY State and NYC taxes on all income including crypto gains, regardless of where your employer is located. The remote work question primarily affects your wage income sourcing, not your investment gains.

 

I moved from NYC to New Jersey mid-year. How are my crypto gains taxed?

You'll file as a part-year resident in both states. Gains realized while a NY resident are taxable to NY; gains realized after establishing NJ residency are taxable to NJ. Proper documentation of your move date is essential. Note that NJ has harsher capital loss rules than NY.

 

Does New York have wash sale rules for crypto?

New York follows federal treatment—and currently, federal wash sale rules do not apply to cryptocurrency (only securities). You can harvest losses and immediately repurchase without a 30-day waiting period. However, legislation could change this, so we document positions carefully.

 

Can I avoid NYC tax by moving to Long Island or Westchester?

Yes—moving outside the five boroughs eliminates NYC resident tax (up to 3.876%), though you'd still pay NY State tax (up to 10.9%). The savings on a $500,000 gain would be approximately $19,000 in NYC tax alone. However, NY will scrutinize whether you've truly changed domicile.

 

What forms do I need for New York crypto tax reporting?

New York residents file Form IT-201 with Schedule A for itemized deductions. Capital gains are reported as part of federal adjusted gross income, which flows to your NY return. Part-year and nonresidents file Form IT-203 with proper allocation of income to NY.

 

Get Expert Help with New York Crypto Taxes

New York's tax rates are among the highest in the nation. Don't overpay—and don't underpay and face penalties. Let's discuss your situation and build a compliant tax strategy.

 

Schedule a Consultation

 

Phone: (862) 320-9554
Email: Greg@MonacoCPA.CPA

 

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