2026 has been a rough year for cryptocurrency investors.

Bitcoin peaked at about $126,000 in October 2025, fell by more than half by June 2026, and has since recovered only to around $80,000.

If you’re sitting on losses, this is the year to put them to work—and if you have gains, some moves can reduce your 2026 taxes too.

Key point. To trigger taxes, you must sell or use the crypto to buy things.

That said, let’s return to the issue at hand—using your crypto to reduce your taxes. Fortunately, you can implement several strategies before year-end to reduce not only your 2026 taxes but also your taxes in future years.

Step Up Tax Basis with Tax-Gain Harvesting

If you expect your income to be higher next year and your crypto to appreciate, it may be wise to step up your crypto basis by harvesting tax gains.

Here’s how it works: You sell your crypto this year and realize your gains. You then repurchase the position. As a result, your tax basis steps up to the current price.

Example. You purchased one Bitcoin for $20,000 three years ago—your basis is $20,000. You sell the Bitcoin today for $80,000, realizing a $60,000 long-term capital gain, which you’ll pay tax on at, say, your 15 percent long-term capital gains rate. You immediately repurchase one Bitcoin for $80,000.

Now your basis is $80,000. If Bitcoin goes up to $120,000 next year (or in any future year), you’ll only have a $40,000 taxable gain instead of a $100,000 gain.

Key point. Remember, if you’ve held your crypto for less than one year, you’ll have ... Log in to view full article.