Crypto Tax California: State Rates, Rules and Filing Tips

The short answer on crypto tax California residents pay: the state taxes crypto gains as ordinary income. There is no lower rate for coins held longer than a year, so a long-term bitcoin gain faces the same 1% to 12.3% brackets as wages. A further 1% surcharge applies to taxable income above $1 million, for a top rate of 13.3%. That state tax comes on top of federal capital gains tax. Staking and mining rewards are income too. Moving away helps only if you genuinely become a nonresident before you sell. Figures: Franchise Tax Board (FTB), 2025 tax year.

Key takeaways

• California treats short-term and long-term crypto gains the same: both are added to your income and taxed at your marginal state rate.
• For 2025, the 12.3% top bracket starts at $742,953 of taxable income for single filers and $1,485,906 for joint filers. The extra 1% Behavioral Health Services Tax applies above $1 million for every filing status.
• A Californian with a large long-term gain can pay about 37% combined on the margin: 20% federal, 3.8% net investment income tax and 13.3% state.
• The state where you live on the day you sell generally decides who taxes the gain. The FTB looks closely at people who move just before a big sale.
• The Digital Financial Assets Law (DFAL) licenses crypto businesses through the DFPI. It does not change how you, as an individual, are taxed.

Crypto tax California vs federal: how the rules differ

For federal purposes, the IRS treats crypto as property. The rules on when you have a taxable event (selling for dollars, swapping one coin for another, spending crypto) are covered in our general crypto tax guide. California generally follows those federal rules on what counts as a taxable event and how you work out gain or loss. The big difference is the rate.

Federal law taxes assets held more than a year at preferential long-term rates of 0%, 15% or 20%, a split explained in our capital gains tax on crypto guide. California has no such split. Your net capital gain simply becomes part of California taxable income on Form 540. Holding for 366 days instead of 364 lowers only your federal bill.

California also follows the federal $3,000 annual limit on deducting net capital losses against other income ($1,500 if married filing separately), with unused losses carried forward. Federal and California loss carryovers can differ if your basis or income differs between the two systems. Schedule D (540) is where you reconcile them.

California tax brackets that apply to crypto gains (2025 tax year)

These are the FTB’s 2025 rate schedules for single filers and married couples filing jointly. They apply to returns filed in 2026. The FTB adjusts the brackets for inflation every year, so use the schedule for the year you sold.

Source: FTB, 2025 California Tax Rate Schedules (Form 540 booklet). Head-of-household filers use a separate schedule (Schedule Z).

Worked examples: federal plus California tax on a crypto gain

These simplified examples use 2025 federal and California brackets. They ignore credits, the alternative minimum tax and deductions beyond what is stated. They show how the two layers stack. They are not a substitute for running your own numbers.

Example 1: single filer, $20,000 long-term gain

Maya has $70,000 of California taxable income before crypto. She sells ETH held for three years at a $20,000 gain, which takes her to $90,000.

• California: the first $2,724 of the gain fills the 8% bracket (up to $72,724), costing $217.92. The remaining $17,276 is taxed at 9.3%, costing $1,606.67. State tax on the gain is about $1,825.
• Federal: her federal taxable income sits within the 15% long-term band (about $48,350 to $533,400 for single filers in 2025), so the gain costs $3,000.
• Combined: about $4,825, roughly 24% of the gain.

Example 2: the same gain, held for only ten months

California’s bill doesn’t change. It is still about $1,825, because the state ignores holding period. Federally, the gain is now short-term and taxed at Maya’s ordinary rate. If it falls entirely within the 22% bracket ($48,476 to $103,350 of federal taxable income for single filers in 2025), that is $4,400. The combined bill rises to about $6,225. Waiting past the one-year mark saved federal tax only.

Example 3: a large long-term gain

A single filer whose California taxable income goes above $1 million because of a long-term crypto gain pays 12.3% plus the 1% surcharge, or 13.3%, on the top slice. Federally, that slice can face 20% plus the 3.8% net investment income tax. On the last dollars of gain, the combined marginal rate is about 37.1%. The federal deduction for state and local taxes (SALT) is capped and phases down at higher incomes, so it gives little offset at this level.

Staking, mining and other crypto income in California

Income you receive in crypto is taxed when you receive it, at its fair market value in US dollars. The IRS took this position for staking in Revenue Ruling 2023-14, and California generally follows federal treatment. That value becomes your cost basis. If the token’s price later moves, selling it creates a separate capital gain or loss, taxed as ordinary income in California either way.

• Staking and lending rewards: ordinary income in the year you gain control of them.
• Mining: ordinary income. If you mine as a business, your expenses (electricity, hardware depreciation) reduce it. California has no state self-employment tax, but the federal one still applies.
• Airdrops and payment in crypto: income at fair market value when received. Crypto wages are subject to normal payroll withholding.

Staking for years does not turn those rewards into lower-taxed “long-term” income in California, because the state has no long-term rate to qualify for.

Moving out of California: FTB residency rules

The usual plan is to move to a state with no income tax and sell there. California generally taxes residents on all their income and nonresidents only on California-source income. Gains from intangible property such as crypto are generally sourced to where you are resident when you sell. California does not impose a general exit tax on unrealized gains. A genuine move made before the sale can therefore keep the gain outside California. Selling first and moving later does not.

“Genuine” is where people get caught. The FTB’s Publication 1031, Guidelines for Determining Resident Status, looks at your overall connections, not just a new driver’s licence:

• where your spouse and children live, and where the children go to school;
• where you own or rent homes, and how much time you spend in each;
• where your bank accounts, doctors, professional licences and business interests are;
• where you are registered to vote and where your vehicles are registered.

The FTB also presumes that anyone who spends more than nine months of the tax year in California is a resident. In a part-year move you file Form 540NR. You report income from the period you were a resident and California-source income after that. Keep dated evidence of the move, such as leases, utility bills, school records and travel logs. Former residents who sold a large crypto position shortly after leaving are an obvious target for an FTB residency audit.

California’s DFAL licensing regime (DFPI)

The Digital Financial Assets Law is a licensing law for businesses, not a tax. Since 1 July 2026, companies that exchange, transfer or hold crypto for California residents have needed either a license from the Department of Financial Protection and Innovation (DFPI) or a completed license application filed on or before that date. That deadline had already been pushed back once, from July 2025. A June 2026 clean-up bill (SB 97) made clear that only a completed application keeps a firm in business while it waits.

For you, this means some smaller or offshore platforms may have stopped serving California addresses. Before you deposit, check DFPI’s licensee and applicant information. The law also limits crypto kiosks (ATMs) to $1,000 per customer per day and caps kiosk charges. None of this changes how your gains are calculated.

Filing tips for California crypto taxpayers

• Start from your federal Form 8949. Your California return starts from federal adjusted gross income, so a clean federal capital-gains schedule does most of the work. File Schedule D (540) only where California figures differ, for example a different basis or a different carryover.
• Pay estimated tax on big gains. California’s estimated payments are front-loaded: 30% due in April, 40% in June, nothing in September, and 30% in January. A large sale early in the year can leave you underpaid if you wait until the following January.
• Use losses before year-end. Realised losses offset gains for both federal and California purposes. Our crypto tax-loss harvesting guide explains the timing and the open question of whether wash-sale rules will apply to crypto.
• Keep records per wallet. Federal rules now require basis to be tracked wallet by wallet. California follows that basis, so missing records cause problems on both returns.
• Check the FTB’s current-year booklet. Rates, brackets and conformity rules change. The figures on this page are for the 2025 tax year.

For more tax and investing explainers, browse our bitcoin guides section.

FAQ

Does California have a capital gains tax on crypto?

California has no separate capital gains tax. Crypto gains are added to your other income and taxed at the regular rates of 1% to 12.3%, plus the 1% surcharge on taxable income over $1 million. Because there is no reduced rate for long-term holdings, someone in the 9.3% bracket pays 9.3% on a gain whether they held the coin for one week or five years.

Do I pay California tax if I sell crypto after moving to Nevada or Texas?

Generally not, if you had genuinely become a nonresident before the sale, because gains on intangible property are usually sourced to your residence at the time of sale. The FTB judges residency by your overall connections, not by paperwork alone. A short stay elsewhere while your family, home and business remain in California is unlikely to hold up if you are audited.

Is crypto-to-crypto trading taxable in California?

Yes. Swapping BTC for ETH, or any token for another, is a disposal for federal purposes, and California follows that treatment. You calculate gain or loss using the dollar value of what you received compared with the basis of what you gave up. In California the result is taxed at ordinary rates.

Are crypto losses deductible on a California return?

Yes. Capital losses offset capital gains, and up to $3,000 of net loss a year ($1,500 if married filing separately) can offset other income. The rest carries forward to future years. California follows the federal limit, but it keeps its own carryover figures, so track both if your federal and state numbers ever differ.

Crypto is volatile and risky; this is education, not financial advice. Do your own research.