The Internal Revenue Service (IRS) has announced a significant delay in implementing new cryptocurrency tax reporting requirements, now set to take effect on January 1, 2026. The decision grants digital asset brokers an additional year to adapt to regulatory changes and establish systems for compliance.
The IRS delays new #Bitcoin tax rules until 2026.
— TFTC (@TFTC21) January 2, 2025
Without this delay, FIFO rules could have forced investors to sell low-cost-basis assets, inflating capital gains. pic.twitter.com/F1rAY2OQpF
Under the new regulations, brokers will be required to determine and report the cost basis of cryptocurrencies traded on centralized platforms. For transactions where taxpayers do not specify an accounting method, the IRS will default to a First-In, First-Out (FIFO) approach, which assumes the oldest assets are sold first.
Initially slated for 2025, the requirements faced criticism for the lack of preparedness among brokers to support specific identification methods, which allow investors to select which units to sell. Industry experts had warned that the lack of infrastructure for these methods could result in unintended tax burdens for investors, particularly during periods of market volatility.
This delay follows several regulatory developments aimed at modernizing tax reporting for digital assets. In June, the IRS established a new tax regime for Bitcoin transactions and postponed rules for and non-hosted wallet providers. Additionally, in August, the IRS introduced a revised 1099-DA tax form for Bitcoin transactions, designed to enhance privacy by omitting wallet addresses and transaction IDs.
The extended timeline offers brokers a crucial opportunity to develop systems that support the upcoming requirements. Taxpayers, meanwhile, can use this period to strategize their accounting methods and adapt to the changes. The IRS is expected to issue additional guidance and conduct information sessions to assist stakeholders in navigating the transition.
