NFT Taxes

NFTs are taxed similarly to other crypto assets — selling an NFT at a profit triggers capital gains tax, and selling at a loss gives you a capital loss you can use to offset other gains.

What makes NFTs potentially more expensive from a tax standpoint is that the IRS may treat them as "collectibles," which are subject to a maximum long-term capital gains rate of 28% rather than the 20% rate that applies to most other long-term assets.

If you create and sell NFTs as a business — meaning you're an artist or developer regularly minting and selling — the proceeds are likely taxed as ordinary income, not capital gains, and you'd also owe self-employment tax.

Purchasing an NFT with cryptocurrency is itself a taxable event because you're disposing of the crypto, so you need to calculate and report the gain or loss on the crypto you used to buy it.

The NFT space moves faster than IRS guidance, so some questions — like exactly when the collectibles rate applies — are still unsettled, but the basic rules of crypto taxation apply regardless.