How to Calculate Your Solana Taxes
Solana has dozens of transaction types — swaps, staking, NFTs, DeFi, airdrops. The IRS treats all cryptocurrency as property, which means nearly every interaction has tax consequences. Here's how to work through the math correctly.
What's Taxable on Solana?
The IRS issued guidance in 2014 classifying cryptocurrency as property, not currency. That one decision determines your entire tax situation. Whenever you dispose of crypto — by selling, swapping, or spending it — you realize a capital gain or loss based on what you paid versus what you received.
Taxable events on Solana:
- ✕ Selling SOL for USD — disposing of property triggers capital gains or losses
- ✕ Swapping tokens — trading SOL for USDC, or any token-to-token swap on Jupiter, Raydium, or Orca counts as a disposal at fair market value
- ✕ NFT sales and purchases — buying an NFT with SOL disposes of that SOL; selling an NFT realizes a gain or loss on the NFT itself
- ✕ Staking rewards — generally treated as ordinary income at fair market value when received (IRS Revenue Ruling 2023-14 confirmed this for proof-of-stake rewards)
- ✕ Airdrops — taxed as ordinary income at fair market value on the date you receive them, if you have dominion and control over them
- ✕ Paying for goods or services with SOL — treated as a disposal at current market value
Not taxable:
- ✓ Transferring SOL or tokens between wallets you own — no disposal occurs
- ✓ Buying SOL with USD — you're acquiring property, not disposing of it
- ✓ Failed transactions — if the transaction didn't execute, nothing was disposed of
- ✓ Wrapping SOL into wSOL — generally treated as the same asset
- ✓ Moving funds to a hardware wallet — still your property, same cost basis
How Capital Gains Work
Every time you sell or swap Solana assets, you calculate a gain or loss using this formula:
The tax rate you pay depends on how long you held the asset before disposing of it. This is the holding period, and it's the single biggest lever you have to reduce your tax bill legally.
Short-term gains (held 1 year or less) are taxed at your ordinary income tax rate — the same bracket as your wages. In 2025, that ranges from 10% to 37% depending on your total income.
Long-term gains (held more than 1 year) qualify for preferential rates: 0%, 15%, or 20% depending on your income. Most people pay 15%.
A real example:
Losses work the same way in reverse — they reduce your taxable gains. If you have more losses than gains in a year, you can deduct up to $3,000 of net losses against ordinary income, and carry forward any remainder to future years.
Cost Basis Methods IRS Rules Apply
If you've bought SOL at different prices over time, you need a method to determine which coins you're selling when you dispose of some of them. The IRS allows several methods, but you must pick one and apply it consistently.
FIFO — First In, First Out (IRS default if you don't specify): The oldest coins you bought are treated as the first ones sold. In a rising market, this often results in the lowest cost basis and the highest taxable gains.
LIFO — Last In, First Out: The most recently purchased coins are treated as sold first. In a rising market, your recent purchases have a higher cost basis, which reduces your gains. Less common for crypto; some tax software doesn't support it.
HIFO — Highest In, First Out: You sell the highest-cost-basis coins first, minimizing your taxable gains in any market condition. Generally the most tax-efficient method. The IRS allows this as a form of Specific Identification.
Specific ID: You identify exactly which lots you're selling. Requires good recordkeeping but gives maximum control. HIFO is a systematic application of Specific ID.
There is no universally "best" method — it depends on your income, the size of your gains, and your holding periods. Run the numbers for your situation, or ask your CPA.