What the new IRS guidance on crypto tax reporting means for investors

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The U.S. Department of the Treasury and IRS on Friday released final tax reporting rules for digital asset brokers — and crypto investors have limited time to prepare, experts say. Mandatory yearly reporting will phase in starting in 2026, with digital currency brokers required to cover gross proceeds from sales in 2025 via Form 1099-DA. In 2027, brokers must include cost basis, or purchase price, for certain digital asset sales for 2026. "These regulations are an important part of the larger effort on high-income individual tax compliance," IRS Commissioner Danny Werfel said in a statement. "We need to make sure digital assets are not used to hide taxable income, and these final regulations will improve detection of noncompliance in the high-risk space of digital assets." More from Personal Finance: Is the U.S. stock market too 'concentrated'? Here's what to know Federal appeals court lets Biden's student loan repayment plan resume Here's what a Supreme Court ruling could mean for Biden's 'billionaire tax' Enacted in 2021 via the Inflation Reduction Act, yearly digital asset reporting was estimated to raise nearly $28 billion over a decade, according to the Joint Committee on Taxation. However, the original start date was postponed. The new IRS regulations come roughly four months after the agency hired two former crypto executives to improve digital currency service, reporting, compliance and enforcement programs. "Everybody's been waiting for the tidal wave of this enforcement activity," James Creech, an attorney and senior manager at accounting firm Baker Tilly, previously told CNBC.