How Are Airdrops Taxed?
Wondering how crypto airdrops are taxed? Our 2026 guide breaks down how airdrops are treated by tax authorities, how to report them, and how to stay compliant.
Crypto airdrops are distributions of a given token or coin to promote a new digital currency and build a community.
Airdrops are taxable. Most tax offices view airdrops as a kind of income, meaning they’ll be subject to Income Tax on receipt.
Some tax offices state certain kinds of airdrops are tax free. It all depends on why you received the airdrop.
If you later sell, or otherwise dispose of, your airdropped tokens, you’ll pay Capital Gains Tax on any gain.
Crypto airdrop tax
Crypto airdrops are generally subject to tax. In fact, you may even pay tax twice on airdrops in some countries. While in other countries, airdrops may be tax-free depending on why they were received.
Let’s break down how airdrop taxes work in different countries, and explore the two main types of tax you might pay: Income Tax and Capital Gains Tax.
Income tax
How an airdrop is taxed depends on where you live and sometimes even the reason you received the airdrop, but in most instances, airdrops are classed as additional income and subject to Income Tax upon receipt. There are a couple of countries that take exception to this stance.
Capital gains tax
Like any other asset, when you sell coins/tokens you got from an airdrop, this will be subject to Capital Gains Tax. The cost basis of your airdropped coins is the fair market value in fiat currency on the date you received your airdrop.
How does the IRS tax airdrops?
The IRS guidance on crypto is clear that airdrops are a type of income, so you should pay Income Tax on any coin or token received from an airdrop. Use the fair market value (FMV) of the coin on the day you received it to figure out how much income you received. This should be reported as “other income” on IRS Form 1040 Schedule 1.
If you later sell or trade coins received from an airdrop, this will be subject to Capital Gains Tax. You can use the same calculation above to figure out your cost basis, then subtract this from the amount you sold them for to calculate your capital gains. This is reported on IRS Form 8949.
EXAMPLE
You receive 400 UNI tokens on the 1st of September. The FMV of UNI tokens that day is $2.
$2 x 400 = $800.
You report $800 of other income on Form 1040 Schedule 1.
You sold your UNI tokens 6 months later. The FMV of UNI tokens that day was $10, so you made $4,000. You already know your cost basis was $800 from your previous calculation.
$4,000 - $800 = $3,200.
You report a capital gain of $3,200 on Form 8949.
How does HMRC tax airdrops?
In the UK, airdrops are treated as income if you’ve done something to earn them, like being rewarded for past trades or completing a task.
But if airdrops just land in your wallet out of the blue, with no strings attached, they’re not considered income.
However, if you’re classed as a trader (meaning crypto is your main source of income), then even unsolicited airdrops may be taxed as income.
If you sell or trade tokens you received from an airdrop and make a profit, that gain is subject to Capital Gains Tax.
You report both income and capital gains on your HMRC Self Assessment Tax Return.
EXAMPLE
You receive 200 UNI tokens on the 1st of September, with a FMV of £2 at the time of receipt. You received these tokens because you had conducted trades on the Uniswap platform prior to this date. This means your UNI token may be subject to Income Tax as you did something in order to receive them.
£2 x 200 = £400. You report £400 of income on your Self Assessment Tax Return.
You sell your UNI tokens at £5 a few months later, so you made £1,000. These are subject to Capital Gains tax. You know your cost basis from the calculation above.
£1,000 - £400 = £600. You report £600 in Capital Gains in your Self Assessment Tax Return or through the Capital Gains Tax Service.
How does the ATO tax airdrops?
The ATO has updated its guidance on how airdrops are taxed. In most cases, like receiving tokens from a marketing campaign, airdrops are treated as ordinary income and are subject to Income Tax.
There is one key exception to the usual rules, and that’s initial allocation airdrops. In this case, the ATO does not treat the airdrop as ordinary income or as a capital gain when you receive it.
When you eventually dispose of airdropped tokens, any profit will be subject to Capital Gains Tax. If you paid Income Tax on them, your cost basis is the same as the FMV. If you did not pay Income Tax on them, your cost basis is zero.
Both income and capital gains are reported in the Individual Tax Return Form, which you can do online with MyTax.
EXAMPLE
You receive 300 1INCH tokens from an airdrop. On the day you receive them, the FMV per token is $3.5. Your tokens are subject to Income Tax, so you need to calculate their total worth.
$3.5 x 300 = $1,050. You report $1,050 of income on your Individual Tax Return Form.
You sell your 1INCH tokens a couple of days later. The FMV per token is $4, so you make $1,200. You can use the calculation above as your cost basis.
$1,200 - $1,050 = $150. You report a capital gain of $150 on your Individual Tax Return Form.
How does the CRA tax airdrops?
The Canada Revenue Agency doesn’t view airdrops as a type of income, provided you’re trading on an individual level and not as a cryptocurrency business. When you sell an asset you received through an airdrop, this would be subject to Capital Gains Tax.
It’s important to note that because CRA uses the adjusted cost basis method, we calculate our cost basis differently than in the other examples. As there is no cost involved in receiving an airdrop, the entire sale is subject to Capital Gains Tax.
Capital gains in Canada are reported on a Schedule 3 Form. You can do this online.
EXAMPLE
You receive 200 1INCH tokens from an airdrop. The FMV of the token that day is $3. Your tokens are not subject to Income Tax as you’re not trading as a business.
You paid nothing for the asset, so your cost basis is $0.
You sold your 1INCH tokens two months later for $4, so you made a total of $800. To calculate your capital gains, subtract your cost basis from the sale price.
$800 - $0 = $800. You report a capital gain of $800 on your Schedule 3 Form.
How does the BZSt tax airdrops?
Airdrops in Germany aren’t considered income by BZst. They’re seen as more akin to a lottery win, and therefore, they aren’t subject to Income Tax.
In even better news, because there is no purchase transaction for an airdrop, they also can’t be considered subject to Income Tax at the point of a subsequent sale.
How are airdrops taxed in other countries?
The tax treatment of airdrops really depends on where you live. And to make things more confusing, many countries haven’t given any clear guidance at all, which often leaves crypto investors guessing.
As a general rule, it’s a good idea to follow your country’s approach to other crypto transactions. If, for example, coins from a crypto fork are treated as income, there’s a good chance airdrops will be too. When in doubt, assume the tax office is watching. You can learn more about the rules where you live in our crypto tax guides.
Calculate airdrop taxes with Koinly
You can simplify crypto taxes with a crypto tax calculator like Koinly. Koinly does all tax calculations for you, based on where you live.
All you need to do is tag your airdrop transactions, and Koinly will calculate your cost basis and any subsequent capital gain from a sale.
If you live in a country where airdrops are treated as income, you can head into the settings page of your Koinly account and turn "treat airdrops as income?" on. Koinly will then calculate the Income Tax for airdrops and add them to your income report.
Once everything is correct, go ahead and download your crypto tax report from the Koinly Tax Reports page. Koinly offers a number of different tax reports to choose from. At tax time, you can submit your report to your accountant, invite your accountant to view your Koinly profile, or file your taxes yourself.
FAQs
What about NFT airdrops tax?
The IRS hasn’t issued specific rules for NFT airdrops yet, but they’ll likely be taxed similarly to crypto airdrops. Recipients may have to report the NFT’s fair market value as income when received. Any profit from selling the NFT later would be subject to capital gains tax, with rates based on how long it was held.
When should I recognize income from an airdrop?
Determining when to recognize income from an airdrop can be tricky. If your rewards have no fair market value when received, you can use the value from when a market becomes available. For airdrops that require claiming, such as paying a gas fee, the IRS hasn’t clarified whether income should be recognized when available or when claimed. It’s likely taxed when you have “dominion and control,” meaning you can sell or trade the tokens. Since timing can vary by airdrop, consult a tax professional for guidance on your specific case.
Does airdrop income get taxed twice?
Yes, but not on the same transaction. When you receive airdropped tokens, they’re taxed as ordinary income based on their fair market value at that time. If you later sell or exchange them, you’ll report a capital gain or loss based on how the token’s value has changed since you received it.
