Why Donating Crypto Could Be the Smartest Tax Move You Make This Year
Why Donating Your Crypto Could Be the Smartest Tax Move of 2025
The world of cryptocurrencies is fast-moving, innovative, and full of opportunity. Early adopters of popular digital assets have often seen impressive returns — and in turn, hefty tax bills. But what if there were a smarter, more impactful way to handle those gains?
As tax season approaches, crypto investors looking to reduce their IRS liability might want to consider a strategic alternative: donating their appreciated crypto to charity.
A Win-Win: Tax Savings Meets Charitable Giving
One of the most overlooked strategies for minimizing crypto-related taxes is charitable giving. Adam Nash, CEO and co-founder of Daffy, a donor-advised fund platform, explains that charitable contributions are among the most generous deductions in the U.S. tax code. In fact, taxpayers can deduct donations of assets like cryptocurrency up to 30% of their adjusted gross income (AGI) each year.
According to Fidelity, a wide range of assets can be donated to eligible nonprofits — including stocks, bonds, mutual funds, and, increasingly, cryptocurrency.
Skip the Capital Gains Tax
If you’ve held your crypto for more than a year and it has appreciated in value, donating it directly to a qualified charity can help you avoid capital gains taxes entirely.
“You’ll benefit from one of the most favorable deductions available,” Nash says. “The IRS allows you to deduct the fair market value of the crypto at the time of donation — not the original purchase price.”
That means you get credit for the full appreciated value without having to pay taxes on your gains. It’s a strategic way to both maximize your deduction and support a meaningful cause.
An Efficient Tax Strategy
Ephraim Olson, co-founder of CPAI — an AI-powered crypto tax platform — agrees that this move can be a savvy one for investors.
“As long as the necessary conditions are met, donating appreciated crypto assets allows taxpayers to claim a deduction equal to the full market value, even if the asset was purchased at a much lower cost,” Olson explains. “The key benefit? You gain the tax advantage from the appreciation without triggering a taxable event.”
This approach is especially beneficial for those who itemize deductions on their tax returns. Donating appreciated crypto can lead to significant tax savings for the donor and more funding for the charity — a true win-win.
Final Thoughts
With tax season upon us, crypto investors might find that giving back could also pay off financially. Whether you're looking to support a favorite cause or simply lower your tax bill, donating appreciated crypto could be one of the smartest financial decisions you make this year.