TaxOnCryptoCan You Write Off Crypto Losses?
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Yes. In the US, crypto losses offset capital gains, then up to $3,000 a year of other income ($1,500 if married filing separately), and any remaining loss carries forward with no time limit. In Canada, half of a capital loss is deductible against taxable capital gains, and unused losses can be carried back three years or forward indefinitely. You have to sell and report to use a loss.
Crypto goes down as well as up. The good news: losses are not just painful — they can reduce your tax bill if you handle them correctly. Here is how losses work in the US and Canada for 2026.
Losses offset gains first
The core principle in both countries: capital losses offset capital gains. If you realized $6,000 of gains and $2,000 of losses in the year, you are taxed on $4,000 of net gain, not the full $6,000.
United States: extra benefits
- Net capital losses can offset capital gains fully.
- If losses exceed gains, you can deduct up to $3,000 a year ($1,500 if married filing separately) against ordinary income.
- Remaining losses carry forward to future years indefinitely.
The wash-sale question
For stocks in the US, the wash-sale rule blocks claiming a loss if you rebuy the same security within 30 days. Under current law it does not cover crypto, but H.R. 10357, approved by the House Ways and Means Committee in September 2026, would extend it to crypto sold after September 14, 2026 if it becomes law. Until that is settled, waiting 31 days before buying the same coin back is the cautious approach. Our tax-loss harvesting guide covers the details.
Canada
In Canada, since only 50% of a gain is taxable, only 50% of a loss is deductible (an “allowable capital loss”). It offsets taxable capital gains; unused losses can generally be carried back or forward under CRA rules. Canada also has a superficial loss rule similar in spirit to the US wash-sale concept.
You must still report losses
A common mistake is not reporting a loss year because “there is no tax owed.” But reporting losses is how you bank them to offset future gains. Skipping it can mean leaving money on the table later.
Frequently asked questions
How much crypto loss can I deduct in a year?
In the US, all of it against capital gains, plus up to $3,000 against other income such as wages. The rest carries forward. In Canada, losses only offset taxable capital gains, and in the UK they offset capital gains.
Does the wash-sale rule apply to crypto?
Not under current US law. H.R. 10357, approved by the House Ways and Means Committee in September 2026, would apply it to crypto sold after September 14, 2026 if it becomes law. Canada's superficial loss rule and the UK's 30-day rule already limit buying back. See our tax-loss harvesting guide.
Do I need to sell crypto to claim a loss?
Yes. A drop in value while you still hold the coin is an unrealized loss and cannot be deducted. Selling, swapping or spending the coin realizes it.
Do I have to report crypto losses?
You should. Reporting a loss is what lets you use it, this year or later. An unreported loss cannot be carried forward.
Bottom line
Losses offset gains and, in the US, some ordinary income, with carryforwards available. Always report them even in down years. Enter your gains and losses in the calculator below to see the net effect, then confirm carryforward details with an accountant.
This guide is general information for the 2026 tax year, not tax, legal or financial advice. Tax rules change often, so confirm your situation with a qualified professional before you file. Spotted an error? Email taxoncrypto@gmail.com.