Stablecoin Tax Guide 2025

Even though stablecoins are designed to minimize price fluctuations, the IRS treats them similarly to other cryptocurrencies. Many interactions—selling, trading, using them for purchases, or receiving them as income—can be taxable events. However, buying stablecoins with fiat currency is generally not taxable, as it simply establishes your cost basis.

Let’s break down the common scenarios.

Selling Stablecoins for Fiat Currency

While stablecoins aim to maintain a $1 price, selling them for fiat currency (e.g., exchanging USDC for USD) is considered a taxable event by the IRS.

Because stablecoins are pegged to the dollar, any capital gains or losses from these transactions are typically minimal. However, they must still be reported.

Example:

• You purchase 45,000 USDC for $45,000.

• Later, you convert 45,000 USDC back into USD. After minor price fluctuations and trading fees, you receive $45,012.75.

• Your capital gain is $12.75, which must be reported on your tax return.

Although the gain is small, stablecoin transactions remain subject to capital gains tax. Keeping detailed records is crucial for compliance. Platforms like Integral can automate transaction tracking, making tax season less stressful.

Trading Stablecoins for Other Cryptocurrencies

Swapping USDC for Bitcoin or Ethereum? The IRS generally considers this as two transactions:

1. Selling your stablecoin (potentially triggering a capital gain or loss).

2. Buying a new cryptocurrency (establishing a new cost basis).

Even if any gain or loss is small, it still needs to be recorded and reported. Accurate transaction tracking is essential—Integral’s automated system ensures every trade is captured properly.

Using Stablecoins to Make Purchases

Paying for goods or services with stablecoins is considered a disposal of those coins—meaning it may incur a capital gain or loss.

Example:

• You use 500 USDC to pay for a software subscription.

• If your USDC’s cost basis was slightly different than $1 per token due to market fluctuations, you could incur a taxable gain or loss.

For businesses accepting stablecoins, the value of the received stablecoin must be reported as ordinary income at the time of the transaction.

Earning Stablecoins as Income

If you receive stablecoins as a form of income—whether from freelancing, staking rewards, or salary payments—this amount is taxed as ordinary income at its fair market value when received.

• If you are self-employed or operating a business, you may need to report this on Schedule C (and potentially pay self-employment tax).

• If the stablecoins come from something more passive or from a hobby, you might report it on Schedule 1 as “Other Income.”

For instance, if a consultant is paid 5,000 USDT for professional services, they generally must report $5,000 of business or self-employment income. Consult a tax professional to ensure you’re using the correct forms.

Integral can simplify crypto bookkeeping by automatically categorizing income transactions and generating tax-ready reports.

Converting One Stablecoin to Another

Swapping USDT for USDC may look like an even exchange, but it’s still a taxable event in the eyes of the IRS. Even a fraction of a cent difference is technically a gain or loss that must be tracked and reported.

Note: There is no de minimis exemption for small crypto transactions under current law. All gains and losses must be reported, regardless of size.

Using Integral’s automated system helps users manage these micro-gains and losses without manually calculating every trade.