Crypto Taxes in New Jersey: 2025–2026 Rules, Tools & Workflows

Cryptocurrency has gone mainstream, and tax authorities have taken notice. If you’re a New Jersey crypto investor or trader, you need to navigate both federal and state tax rules that are evolving in 2025–2026. The IRS and the New Jersey Division of Taxation are updating guidance on everything from Bitcoin and DeFi to NFTs and staking income. In this comprehensive guide, we’ll break down the latest rules, key changes for the 2025–2026 tax years, and practical workflows to tackle your crypto taxes with confidence. Our goal is to explain these complex regulations in plain English – and help you avoid costly mistakes while ensuring you stay compliant.

New for 2025: Starting with the 2025 tax year, exchanges and brokers will issue a new Form 1099-DA for digital asset transactions, making it easier to report your crypto trades. New Jersey generally follows IRS rules on crypto, but there are state-specific details – like tax rates and loss treatments – that can catch you off guard. Read on for a New Jersey-focused crypto tax guide, complete with pro tips, common mistakes to avoid, a handy checklist, and an FAQ section to answer the most common NJ crypto tax questions.

Federal vs. New Jersey Crypto Tax Overview

How the IRS Sees Crypto: The IRS classifies cryptocurrency and other digital assets (including stablecoins and NFTs) as property, not currency. This means that crypto transactions are generally taxed similarly to stocks or real estate. If you sell, trade, or otherwise dispose of a crypto asset for more than you paid for it, you have a capital gain; if you dispose of it for less, you have a capital loss. Crypto income – such as receiving coins from mining, staking, or as payment – is taxed as ordinary income at the fair market value on the day you received it. The IRS has made it clear that every taxpayer must answer a digital asset question on their tax return and report all crypto-related income. In short, crypto is taxable under federal law in most cases, and failing to report it can lead to penalties.

How New Jersey Taxes Crypto: New Jersey’s tax treatment of cryptocurrency largely conforms to the federal treatment. The New Jersey Division of Taxation considers convertible virtual currency (like Bitcoin and other crypto) to be intangible property, just as the IRS does. If you have a taxable crypto transaction federally, you generally have a taxable transaction for New Jersey Gross Income Tax purposes as well. In practical terms, this means New Jersey taxes crypto profits as part of your state income, at rates up to 10.75% (the top NJ tax bracket). There’s no special crypto tax form in NJ – you report crypto gains or income on your regular NJ-1040 state return, just as you would report interest, dividends, or stock sales.

However, there are a few key differences between federal and New Jersey tax rules:

• No Special Rate for Long-Term Gains: The IRS rewards long-term investors with a lower capital gains tax rate (0%, 15%, or 20% depending on income) for assets held over a year. New Jersey, by contrast, taxes all capital gains at ordinary income tax rates, regardless of holding period. Whether you held your crypto for a day or for five years, any gain is added to your NJ taxable income and taxed at the same rate as your salary or other income. New Jersey does not differentiate between short-term and long-term capital gains.

• No Loss Carryovers or $3,000 Deduction: Federally, if your capital losses exceed your gains, you can deduct up to $3,000 of the excess loss against other income, and carry over remaining losses to future years. New Jersey does not allow this. You can use crypto losses to offset crypto gains in the same tax year, but NJ disallows carrying losses forward and does not permit a $3,000 net capital loss deduction against other income. In NJ, if your crypto trades result in a net loss for the year, you simply report zero gain for state tax – you can’t deduct the loss or carry it into next year.

• Taxing Crypto Income: If you earn cryptocurrency as payment for work or services (including mining and staking rewards), the IRS treats it as immediate income and so does New Jersey. For example, if you mined 0.1 BTC when its market value was $3,000, you have $3,000 of taxable income. That income is subject to federal income tax and to NJ Gross Income Tax. New Jersey requires employers to withhold state income tax on crypto wages just as they would for cash wages. If you’re an independent contractor paid in crypto, you must determine the USD value on the date you received it and report that as income. (Yes, that also means you may owe estimated taxes in NJ on that income – more on planning ahead later.)

• Sales Tax and Crypto: New Jersey treats cryptocurrency as intangible property for sales tax purposes. Buying cryptocurrency for investment is not subject to NJ Sales Tax. However, if you use crypto to pay for goods or services in New Jersey, it’s treated like a barter transaction – the sale is taxable. The merchant must convert the crypto price to USD at the time of sale and charge NJ sales tax on the purchase as usual. (This mostly matters for businesses accepting crypto; as an individual, remember that spending crypto triggers capital gains tax for you as well.) New Jersey also clarified that because crypto is intangible, certain corporate tax protections for tangible goods sales (Public Law 86-272) don’t apply – but that’s beyond the scope of personal taxes.

Common Mistake: Don’t assume New Jersey gives crypto the same breaks as federal law. For instance, NJ does not allow the $3,000 capital loss deduction or any carryover of crypto losses. If you had a big trading loss in 2025, you can use it to offset gains in 2025 for NJ, but you cannot carry it forward to 2026. Failing to note this difference could mean paying more NJ tax than necessary (or filing incorrectly).

In summary, New Jersey’s crypto tax rules mirror federal rules on what is taxable, but differ in how gains are taxed (no long-term rate) and how losses are handled. Next, we’ll detail exactly which crypto events are taxable and which aren’t – a crucial foundation for your tax planning.

Taxable vs. Non-Taxable Crypto Events

Not every crypto move you make is a taxable event. It’s important to know which actions will trigger taxes and which won’t. Below is a quick overview of taxable vs. non-taxable crypto events:

Taxable Crypto Events	Non-Taxable Crypto Events
Selling cryptocurrency for fiat (e.g. converting Bitcoin to USD). This creates a capital gain or loss that must be reported.	Buying cryptocurrency with fiat (e.g. purchasing BTC with USD). Simply buying and holding crypto is not a taxable event.
Trading one crypto for another (crypto-to-crypto swap). Exchanging, say, ETH for BTC is treated as selling ETH for its value and buying BTC – a taxable disposition of the ETH.	Transferring crypto between your own wallets or accounts. Moving your coins from Exchange A to your private wallet (with no change in ownership) is not taxable.
Using crypto to purchase goods or services. If you spend crypto to buy a car or pay for a meal, it’s two things: a purchase and a sale of the crypto at its market value (triggering gain or loss).	Holding crypto without selling. Simply holding (HODLing) your crypto and watching the market, no matter how much it increases in value, isn’t taxable until you sell or exchange.
Receiving crypto as payment for work or services. This includes salary in Bitcoin, freelance income paid in ETH, mining rewards, staking interest, airdrops, or referral bonuses in crypto – all are taxable income upon receipt.	Gifting crypto (within limits). Gifting crypto to someone is not an income-taxable event for the giver or receiver at the time of the gift. However, large gifts may require a federal gift tax return (Form 709) and future sales by the recipient will be taxable.
Receiving new coins from a fork or airdrop. If a blockchain fork or airdrop gives you new tokens, those tokens’ fair market value are taxable income when you have control over them (even if you didn’t ask for them).	Donating crypto to a qualified charity. Donations of cryptocurrency are treated like donations of stock: not a taxable sale, and you may get a charitable deduction for the fair value. (Make sure to get a receipt and possibly an appraisal for large donations.)

In short, anytime you dispose of a crypto asset (by selling, trading, or spending it) or receive crypto as income, it’s likely a taxable event. Non-taxable events are mainly holding or moving your own crypto, or buying crypto with cash. A helpful rule of thumb is: if you wouldn’t expect a tax for a similar move with stocks or cash, the same usually applies to crypto. For example, moving $100 from your checking to savings isn’t taxable (analogous to transferring between wallets), but selling one stock to buy another is taxable (analogous to trading BTC for ETH).

Common Mistake: “I never cashed out to dollars, so I thought I didn’t owe taxes.” This is false. Crypto-to-crypto trades are taxable – swapping Bitcoin for Ethereum is treated like selling Bitcoin for its USD value and buying Ethereum. Similarly, using crypto to buy something is taxable because you’ve disposed of the asset. You don’t need to convert to cash for the IRS and NJ to expect their cut. Make sure to report those trades, even if no fiat money hit your bank account.

Another Common Mistake is forgetting that receiving crypto can be taxable. If you earned interest on DeFi platforms, got staking rewards, or received an airdrop, those count as income in the year you received them (at their market value on that date). You’ll want to keep track of the amounts and dates so you can report that income. We’ll cover strategies and tools for tracking this in the workflow section.

Now that we know what transactions trigger taxes, let’s look at what’s new for the 2025–2026 tax years. Crypto tax rules have been a moving target, but 2025 brings some significant changes aimed at improving compliance (and making life a bit easier for taxpayers reporting multiple trades).

What’s New in 2025–2026 for Crypto Taxes

The 2025 tax year is a turning point for crypto tax reporting due to new IRS regulations stemming from the Infrastructure Investment and Jobs Act of 2021. Both the IRS and New Jersey have updated guidance that will affect how you prepare your 2025 and 2026 returns. Here are the key changes and updates:

• New Form 1099-DA (Starting Jan 2025): Beginning with transactions on or after January 1, 2025, crypto “brokers” (exchanges and platforms) are required to report your sales to the IRS on a new information form called Form 1099-DA. This form will report your gross proceeds from crypto sales in 2025. By 2026, these brokers will also need to report your cost basis for certain transactions. In plain language, this means that for tax year 2025 (filed in 2026), you should start receiving official tax forms from exchanges listing what you sold crypto for. And for 2026 and beyond, they’ll also report how much you originally paid (basis) if they have that info. The goal is to make it easier for you to file taxes – and harder to under-report gains since the IRS will get the same info. Expect to receive 1099-DA forms by early 2026 from major exchanges if you have taxable transactions in 2025.

• Phase-In and Transition Relief: The IRS is phasing in these requirements. For 2025 sales, only gross proceeds are required on the 1099-DA; for 2026, basis reporting kicks in. There’s also transitional relief: the IRS announced it won’t impose penalties for 2025 transactions if brokers make good-faith efforts to comply. So, if an exchange struggles with the new reporting system in the first year, you likely won’t see them penalized immediately. For taxpayers, it means the first year of forms might not be perfect. Still, you should use whatever information is provided to accurately report your gains. (New Jersey will also benefit from these forms, since NJ tax authorities typically get copies of IRS information forms where applicable.)

• Decentralized Finance (DeFi) and Broker Definition: Notably, the new IRS rules do not yet apply to decentralized or non-custodial platforms that don’t take possession of your crypto. The regulations cover exchanges, hosted wallets, and other intermediaries who custody assets, but DeFi protocols are a gray area. The IRS explicitly carved out certain transactions – like staking, lending, or liquidity pool transactions – from the 1099-DA reporting requirements until they issue further guidance. Important: Just because these might not be reported by a platform doesn’t mean they aren’t taxable – it just means you might not get a tax form and will need to track and report those manually (as before). The IRS is still figuring out how to handle DeFi reporting, but you are still obligated to report your income and gains from these activities.

• Expanded Digital Asset Question: The IRS “Yes/No” question about digital assets on tax returns was updated recently. In 2023 it was reworded and also added to business tax forms (Forms 1065, 1120, etc.). For individual returns, the question now explicitly asks: “At any time during [the year], did you (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, or otherwise dispose of any digital asset (or financial interest in a digital asset)?”. This phrasing captures virtually every scenario, including receiving tokens from mining/staking and gifting or exchanging assets. All taxpayers must answer this question under penalty of perjury – even if you didn’t have any crypto activity, you must check “No.” The IRS expanded this question to more types of tax returns to ensure businesses and trusts report crypto activities too. For 2025 and 2026, expect a similar question on your 1040 (likely updated for each year as needed). Always answer it accurately and make sure your answer matches what you report in detail on your return.

• NFTs as Collectibles (Proposed): A noteworthy development for NFT enthusiasts: The IRS has signaled that certain NFTs might be treated as “collectibles” for tax purposes in the future. In early 2023, IRS Notice 2023-27 suggested that if an NFT’s content is a collectible (like a work of art), gains from that NFT could be taxed at the higher collectible capital gains rate (28% for federal tax) and could be restricted in retirement accounts. This wasn’t a rule yet for 2025, but it shows the IRS’s thinking. If you trade NFTs, keep an eye on this space – by 2026 or beyond, new guidance might formally classify some NFTs as collectibles. New Jersey, however, doesn’t have special rates for collectibles; NFT sales would just be part of your taxable income. The bottom line: as of 2025, NFT sales are taxed like crypto or any property (capital gains), but the IRS may tighten rules later. It’s wise to document the nature of your NFTs (art, game item, etc.) in case special rules or exceptions eventually apply.

• Section 6050I Reporting (Delayed): A quick note for businesses: a rule that would have required businesses to report receipts of over $10,000 in crypto (similar to cash transaction reports on Form 8300) was set to start in 2024. However, the IRS has delayed this requirement pending regulations. So for 2025, you don’t need to file a Form 8300 for large crypto payments yet. But this could change, so if you run a business that accepts big crypto payments, stay tuned to IRS announcements.

All these changes point to one theme: more oversight and more clarity. Tax authorities want to ensure crypto gains are reported, and they’re providing tools (like 1099-DAs) to help. For you as a taxpayer, this means it’s becoming easier to get the data you need – but also harder to hide taxable events. If you receive a Form 1099-DA in 2026 for your 2025 trades, remember that the IRS gets the same form. Make sure your federal and NJ returns include the income/gains shown, or it will raise red flags.

Pro Tip: If you get a new 1099-DA or any tax form for crypto, use it as a cross-check against your own records. Don’t rely solely on the form – sometimes cost basis might be missing or incomplete. Always reconcile the forms with your transaction history. If something like staking income isn’t on a 1099, you still must report it. Good recordkeeping is key, which leads us to our next topic: how to actually compile all this information and prepare your crypto tax filings step by step.

Crypto Tax Tools and Workflows for Compliance

Handling dozens, hundreds, or even thousands of crypto transactions can be daunting. Fortunately, there are tools and established workflows to simplify the process. As a New Jersey CPA firm, we’ve developed a workflow to ensure no income or gain slips through the cracks, and that you maximize any available benefits. Here’s how to tackle your crypto taxes from start to finish:

1. Track Your Transactions Year-Round: Keep a log of all your crypto activity. Many investors use software tools like CoinTracker, Koinly, TaxBit, or others to aggregate data from exchanges and wallets. These tools connect via API or CSV uploads and can generate a report of all your trades, buys, sells, and received income. Even with new IRS forms coming, it’s wise to have your own complete records. Don’t forget “off-exchange” activity: DeFi trades, wallet-to-wallet transfers (for basis tracking), NFTs, etc., may not be captured by exchange reports. Make sure to record what you paid (cost basis) and what you received for each transaction. This log is the foundation for calculating gains and income.

2. Identify Taxable Events: Using the guidelines from the earlier section, mark which transactions are taxable. For example, transferring between your own wallets (non-taxable) can be noted just for tracking, but selling or trading assets (taxable) should be flagged for gain/loss calculation. Similarly, note any crypto income (mining, staking, airdrops, interest) separately, since those will be treated as ordinary income. Many crypto tax software tools automatically flag common taxable events, but you should double-check. This step ensures you know exactly which events need to be reported.

3. Calculate Gains and Losses: For each taxable sale or trade, calculate the capital gain or loss. This means finding the difference between the asset’s selling price (or value when disposed) and your cost basis (what you originally paid for it). If you traded one coin for another, use the USD value of what you received (or gave up) at the time. For example, if you traded 1 ETH for 0.07 BTC, find the USD value of 0.07 BTC at that moment – that’s effectively your sale proceeds for the ETH. Subtract what you paid for that 1 ETH originally to get your gain or loss. Crypto tax software can do this automatically if your records are complete. One consideration: which units did you sell?** If you bought crypto in batches, you can typically use specific identification or default to FIFO (first-in, first-out) for calculating gains. The new IRS rules will require brokers to use FIFO by default, so it’s prudent to use FIFO unless you have records to specifically identify lots. Calculate gains separately for each transaction – you’ll need these for tax form reporting.

4. Compile Your Crypto Income: Sum up all instances of crypto you received as payment, rewards, or other income. The key is to use the fair market value at the time you received each item. For mining or staking, it might be a daily or weekly total if you mine frequently. If you were paid in crypto for a freelance job, use the value on the day you were paid. This total (in USD) will be reported as other income (or possibly business income if you’re a professional miner or doing it as a business). Don’t mix these up with capital gains from selling – they are treated separately on your tax return (ordinary income vs. capital gain). It’s a good idea to keep documentation (screenshots or transaction IDs) that show how you determined the USD value.

5. Use Tools for Accuracy: Leverage crypto tax calculators and portfolio trackers to automate the above where possible. Many tools can generate a Form 8949 (the tax form for reporting capital asset sales) or at least an export of all gains and losses. Ensure the tool is using the correct assumptions (FIFO vs specific ID, inclusive of all fees, etc.). Additionally, if you had NFT transactions, some tools now handle NFTs, but you may need to manually input some, especially if they occurred in decentralized wallets. The goal is to have a neatly calculated list of every taxable event’s gain or loss, and a total of all your crypto-related ordinary income.

6. Review Federal and State Tax Implications: Once you have totals, determine how they fit into your tax returns. Federally, crypto sales get reported on Form 8949 and summarized on Schedule D. Crypto income might go on Schedule 1 (as other income) or Schedule C if it’s self-employment. For New Jersey, include your net crypto gains in the category “Net gains or income from disposition of property” on your NJ-1040. Crypto income (from mining/staking or wages) would be reported as part of your wages or business income on the NJ return. New Jersey does not have separate forms for these; you just include them in the relevant lines. Double-check differences: for instance, if you have net capital losses federally, remember you can’t take the full loss in NJ beyond offsetting current-year gains. It might be useful to keep a worksheet reconciling what you reported to the IRS vs NJ.

7. Plan for Taxes Due: If you had significant crypto profits in 2025, you might owe a hefty sum to the IRS and NJ. Don’t wait until filing time – consider making estimated tax payments. New Jersey, like the IRS, has quarterly estimated tax requirements if you expect to owe more than $400 when you file. This can help you avoid underpayment penalties. Also, because NJ taxes crypto gains at regular income rates, a big win on crypto could push you into a higher NJ bracket (up to 10.75%). Planning ahead lets you set aside cash (maybe by selling a bit of crypto for fiat) to cover the tax. Some traders even sell a portion of their gains immediately to reserve for taxes (the “save for taxes” approach).

8. Take Advantage of Tax Strategies: Use strategies like tax-loss harvesting if appropriate – selling some losing positions by year-end to offset gains. Remember, while the IRS “wash sale” rules currently do not clearly apply to crypto (since crypto isn’t a stock or security), this could change in the future. As of 2025, many investors harvest crypto losses in December and buy back similar positions shortly after, which, for now, is not disallowed. This can lower both federal and NJ taxes (though if you end up with a net capital loss, NJ won’t let you carry it forward). Also consider charitable donations of appreciated crypto: donate an appreciated coin directly to a charity, and you may get a full-value deduction (federal and NJ) while avoiding the capital gain. Always consult a tax advisor for such moves to do them correctly.

9. File Your Tax Returns Correctly: When filing, include all the necessary forms. For federal: Form 8949 & Schedule D for gains, Schedule 1 or C for income, Form 1040’s “digital assets” question answered “Yes” if you had any taxable events (or “No” if you simply held crypto and did nothing else). For New Jersey: there isn’t a separate crypto question or form, so just ensure the income is integrated. After filing, keep all your supporting documents – transaction history, exchange statements, etc. – in case of any questions from the IRS or NJ Division of Taxation.

10. Stay Informed for Future Changes: The crypto tax landscape can change. For instance, if you’re reading this in late 2026, there might be new rules (e.g., that NFT guidance or updated state laws). Make it a habit to check for updates each tax season. The IRS frequently updates its Digital Assets FAQs, and NJ may issue new guidance if laws change. Following reputable tax blogs (or subscribing to our newsletter) can keep you in the loop.

Pro Tip: Maintain organized records – it’s your best defense in the event of an audit or discrepancy. Use spreadsheets or crypto tax apps to record the details of every transaction: date, amount, value in USD, purpose (trade, income, etc.), and fees paid. This makes preparing your returns much easier. The IRS has explicitly warned that “failing to accurately report income may result in accrued interest and penalties”, so having documentation to back up your figures is crucial. New Jersey can also audit your return; if they see you reported large stock sales but no crypto, for example, they might inquire about that “Yes” on the digital asset question. Good records ensure you can respond confidently.

With your calculations done and records in hand, you’re ready to file and pay your crypto taxes. If this still feels overwhelming, remember you don’t have to do it alone – a crypto-savvy CPA can handle the heavy lifting or at least review your self-prepared numbers. Many of our clients breathe a sigh of relief after we reconcile their hundreds of transactions! Next, let’s address some of the most common New Jersey-specific crypto tax questions we hear, in our FAQ section.

FAQ: New Jersey Crypto Tax Questions

Below we answer some frequently asked questions about cryptocurrency taxes in New Jersey, especially for the 2025–2026 tax years. (For more general crypto tax FAQs, see IRS resources, but here we focus on NJ residents.)

Q1. How does New Jersey tax cryptocurrency gains?

A1. New Jersey taxes cryptocurrency gains as part of your regular income on your state tax return. NJ conforms to federal tax treatment of crypto: if you have a capital gain from selling or trading crypto, that gain is included in your New Jersey taxable income. There’s no special rate – crypto gains are taxed at the same graduated rates as other income (up to 10.75% for high earners in 2025). You’ll report net gains from crypto along with other capital gains on your NJ-1040 (in the “net gains from disposition of property” section). If you have crypto losses, you can use them to offset crypto gains in the same year, but not beyond (see next question on losses).

Q2. Do I owe New Jersey tax for crypto-to-crypto trades, or only when I cash out to dollars?

A2. You owe tax on crypto-to-crypto trades as well. New Jersey follows the IRS in treating a trade of one cryptocurrency for another as a taxable event. For example, swapping Ethereum for Bitcoin is treated as if you sold Ethereum for its market value and bought Bitcoin. Any gain on the Ethereum is taxable income (and any loss could offset other gains). It’s not necessary to convert to USD for a transaction to be taxable. So even if you never “cashed out” to fiat in your bank account, you must report gains/losses on trades between cryptocurrencies. When you do eventually sell for USD, that’s also taxable of course. Bottom line: any disposal of crypto – whether for dollars, goods, or another crypto – is taxable to NJ if it’s taxable federally.

Q3. Are crypto mining or staking rewards taxed in New Jersey?

A3. Yes. Crypto you earn through mining, staking, airdrops, forging, yield farming, or as interest is taxable income in the year you receive it, at both federal and state levels. If you successfully mine a block or receive staking payouts, you’re supposed to calculate the USD value of the coins at the time you received them and report that as income. For NJ Gross Income Tax, this would typically fall under either wages (if you’re an employee paid in crypto) or business income (if you’re running a mining operation), or “other income.” The key point: New Jersey taxes crypto earned as income just like cash income. It will be subject to NJ’s income tax rates (and federal tax rates as well). Also, if you’re self-employed (e.g., mining on your own), remember there could be self-employment tax federally, though NJ doesn’t have a separate SE tax. Keep detailed records of any crypto you mine or stake – you’ll need the value at receipt to report it. And yes, you owe NJ tax even if you don’t sell the rewarded coins immediately; simply receiving them is taxable. (One relief: if you later sell those coins, you don’t get double-taxed on the same value – you’d use the value at receipt as your cost basis going forward.)

Q4. Does New Jersey have a lower tax rate for long-term crypto gains?

A4. No. Unlike federal tax law, New Jersey does not have a special lower rate for long-term capital gains. All crypto gains are taxed as ordinary income in NJ, no matter how long you held the asset. For example, if you bought Bitcoin in 2016 and sell in 2025 for a large gain, the IRS may tax that at 15% or 20% (long-term capital gain rate), but New Jersey will tax the gain at your regular income tax rate (which could be up to 10.75%). This often surprises taxpayers who are used to the federal system. So, when estimating your taxes, don’t assume a lower rate for long-term holdings on the NJ side – calculate it with your full NJ rate. Also note: New Jersey doesn’t differentiate between types of capital assets either (stock, crypto, real estate – all the same rate). Everything just flows into your state taxable income.

Q5. Can I deduct crypto losses on my NJ tax return or carry them over?

A5. You can deduct crypto losses against crypto gains in the same year, but that’s as far as it goes. New Jersey does not allow net capital losses to reduce other income, and it does not allow carryovers of unused losses. For instance, if in 2025 you have $5,000 of crypto gains and $8,000 of crypto losses, federally you have a net $3,000 loss which you could deduct against other income (and carry forward the rest). In NJ, your net gain would be $0 for 2025 (you don’t get to use the extra $3,000 loss at all – it effectively disappears for NJ tax purposes). Likewise, if you only had losses and no gains, NJ does not let you claim a deduction nor carry it to next year. The losses only have value to the extent of current-year gains. So plan your trading accordingly: there’s a “use it or lose it” element to capital losses in NJ each year. This is one reason some NJ crypto investors do year-end planning to realize gains to utilize losses or vice versa. But remember, no matter what, you must report the transactions; if you had losses, you still should file them on your NJ return (they just won’t reduce other income).

Q6. Are NFTs taxable in New Jersey, and are there any special rules for NFTs?

A6. NFT (Non-Fungible Token) transactions are taxable in New Jersey in the same manner as other property/crypto transactions. If you sell an NFT for a profit, you have a capital gain that needs to be reported on your NJ-1040 (and your federal 1040). New Jersey doesn’t have special NFT regulations apart from general crypto guidance (which treats virtual assets as intangible property). So an NFT sale gain is taxed at normal NJ income tax rates (no special rate, regardless of it possibly being a collectible). If you are an artist or creator selling NFTs, the proceeds may be considered business income or self-employment income – you should speak with a tax advisor because that can have additional implications (like needing to pay estimated taxes and possibly NJ sales tax if considered a digital product, although NJ has not explicitly addressed NFT art under sales tax yet). As of 2025, the IRS is considering treating some NFTs as collectibles for federal tax (which matters for things like higher capital gains rate and IRA restrictions), but no final rule yet. New Jersey doesn’t give collectibles any different treatment in terms of rates. So for now, treat NFTs like any crypto or property sale: report any gain or loss in USD. And yes, if you swap one NFT for another or for crypto, that’s a taxable event just like trading coins.

Q7. I’m a New Jersey resident using an out-of-state crypto exchange. Do I still owe NJ taxes on those gains?

A7. Absolutely. If you’re a New Jersey resident, NJ taxes your income from all sources, anywhere. It doesn’t matter if the exchange is based in California or overseas – your crypto capital gains and income are taxable by New Jersey as part of your resident return. (There’s no double taxation with other states on investment income, generally – unlike wage income, capital gains are usually only taxed by your state of residence.) So you can’t avoid NJ tax by using a particular exchange or wallet. The only way a crypto gain wouldn’t be taxed by NJ is if you were not a NJ resident at the time. For example, if you moved to NJ in mid-2025, only your crypto gains after you became a resident would be taxable in NJ. Gains realized while you were a resident of another state would typically be taxed by that state (and NJ might give a credit if you paid tax elsewhere on income earned before moving, in the year of transition). This gets complex, so consult a tax professional if you moved across state lines with crypto holdings. But the core rule is: NJ residents owe NJ tax on crypto profits, regardless of where the exchange is or where the income originates.

Q8. Does New Jersey offer any crypto-specific tax breaks or programs (like tax credits, exemptions, etc.)?

A8. Currently, New Jersey does not offer special tax credits or exemptions for cryptocurrency income or gains. Crypto is treated like any other investment or income source. Some states have considered incentives (or attracting blockchain business with tax breaks), but NJ’s taxation of crypto for individuals is straightforward – it’s part of your taxable income. One thing to note: New Jersey did clarify that buying crypto is not subject to sales tax (since it’s intangible property), and using crypto as payment follows normal sales tax rules. Also, if you run a crypto-related business, New Jersey’s existing tax programs (like R&D credits) might apply if you meet those criteria, but nothing specifically for crypto holdings. Keep an eye on the legislative developments, though. New Jersey has had bills proposed around regulating crypto kiosks, licensing exchanges, and even studying state-backed digital currencies, but none of these currently change how individuals are taxed. So the best “break” available is the usual tax planning strategies: use tax-loss harvesting, donate appreciated assets, or invest via retirement accounts (though note: the IRS doesn’t allow holding actual crypto in a traditional IRA directly, and if NFTs become collectibles, those can’t be in IRAs either). In summary, no special crypto tax loopholes in NJ – just good planning and use of federal rules to your advantage.

Hopefully, these FAQs clear up the most common points of confusion. If you have a question not covered here, feel free to reach out to us – chances are, you’re not the only one asking it, and we’re happy to explain the answer in plain English.

Next Steps – Get Professional Crypto Tax Help

Cryptocurrency taxation can be complex, especially with new rules rolling out. The good news is you don’t have to figure it all out on your own. As CPAs who stay on top of the latest crypto tax developments, we’re here to help New Jersey taxpayers like you navigate these rules confidently and even identify opportunities to save on taxes.

Ready to simplify your crypto taxes? Contact our team for a free, no-obligation consultation. We’ll review your 2025–2026 crypto tax situation, answer your questions, and help you chart the optimal path forward. Whether you need full tax preparation, a second look at your self-prepared return, or a comprehensive tax planning session (perhaps you want to strategize your crypto moves for the coming year), we have you covered.

Book a Free Consultation with our crypto-savvy CPA team today, and ensure your New Jersey crypto taxes are handled correctly. Let us focus on the ever-changing tax rules while you focus on your investments. Together, we’ll make crypto tax season far less daunting – and maybe even turn it into a planning opportunity for your financial future.

→ Book a Free Consultation • Bookkeeping & Accounting • Crypto Tax

Gregory Monaco, CPA | Livingston NJ (serving NJ + virtual nationwide)