Selling an NFT at a profit triggers capital gains, and buying an NFT with crypto is itself a taxable disposal of the crypto you used.
In the US, NFTs are treated as collectibles, capped at a 28% long-term rate; in the UK the CGT rates are 18%/24% with a £3,000 annual exempt amount; in Canada 50% of a gain is taxable.
Creating and selling NFTs as a business is taxed as income on top of any capital gains on the underlying crypto.
Gas fees on personal NFT purchases are generally not deductible, and tracking every acquisition and disposal is essential across platforms.
NFTs are taxable in most countries. Whether you buy, sell, create, or receive an NFT, there are tax implications.
Here’s exactly how NFT taxes work in the US, UK, and Canada.
When NFTs Are Taxable
NFT Activity
Taxable?
Type of Tax
Selling NFT for profit
Yes
Capital gains
Buying NFT with crypto
Yes
Crypto disposal
Buying NFT with fiat
No
N/A
Receiving NFT as gift
No
Until you sell
Minting NFT (gas fees)
No
Not deductible (personal)
Creating and selling NFT
Yes
Income + capital gains
NFT Taxes by Country
United States
Rule
Details
IRS treatment
Property (not currency)
Collectibles rate
Up to 28% (higher than stocks)
Short-term
10-37% ordinary income
Long-term
0-20% + 3.8% NIIT
Reporting
Form 8949 + Schedule D
State tax
Applies in most states
The 28% collectibles rate: NFTs are classified as “collectibles” by the IRS, which means the maximum long-term capital gains rate is 28% — higher than the 20% maximum for stocks.
United Kingdom
Rule
Details
HMRC treatment
Cryptoasset
CGT rate
18% (basic) / 24% (higher)
Annual exempt
3,000 GBP
Reporting
Self Assessment tax return
30-day rule
Applies to crypto used
Income tax
If creating as business
Canada
Rule
Details
CRA treatment
Commodity
Taxable
50% of capital gain
Marginal rate
20-53% depending on province
Reporting
T1 return, Schedule 3
Business income
If trading as business
Common NFT Tax Scenarios
Scenario 1: Buy ETH, Buy NFT, Sell NFT
Step
Tax Event
Amount
Buy ETH for $2,000
None
N/A
Buy NFT with ETH (ETH now worth $2,500)
$500 capital gain on ETH
Taxable
Sell NFT for $5,000
$3,000 capital gain on NFT
Taxable
Total tax
$3,500 in gains
Taxed at your rate
Scenario 2: Mint Free NFT, Sell
Step
Tax Event
Amount
Mint NFT (gas: $50)
None (not deductible)
N/A
Sell NFT for $500
$500 income (cost basis: $0)
Taxed as income
Total tax
$500
Ordinary income rate
Scenario 3: Receive Airdrop NFT
Step
Tax Event
Amount
Receive airdrop NFT
$100 income at FMV
Taxed as income
Sell NFT for $500
$400 capital gain
Taxed at gains rate
How to Track NFT Taxes
Method
Pros
Cons
Tax software
Auto-imports, calculates
Costs $50-300
Spreadsheet
Free, customizable
Manual, error-prone
Tax professional
Expert advice
Costs $200-500
Recommended Tax Software for NFTs
Software
NFT Support
Price
Koinly
Excellent
$49-279
CoinTracker
Good
$59-599
TaxBit
Good
Free
CoinLedger
Good
$49-299
NFT tax treatment at a glance
Key Point
Takeaway
Selling NFTs
Always taxable (capital gains)
Buying with crypto
Taxable (crypto disposal)
US rate
Up to 28% collectibles rate
UK rate
18-24% CGT
Canada
50% of gain taxable
Track everything
Use tax software
Practical steps for NFT holders
The way to avoid NFT tax problems is to capture the tax picture at the moment each transaction happens, not at filing time. Before you buy an NFT, note what the crypto you plan to spend was worth when you acquired it — that difference becomes a capital gain the instant you spend it. When you sell, record the sale price and the cost basis of the NFT you are disposing of, along with the date, platform, and hash. For airdrop NFTs, the fair market value when received is income, and the subsequent gain from that value is what gets taxed on a later sale.
Tracking all of this across multiple marketplaces is best done with purpose-built tax software, most of which can import NFT transactions and calculate cost basis for you. Koinly and TaxBit are commonly cited as handling NFTs well, but whichever you choose, reconcile it against your own records before filing. If you create and sell NFTs as a business, separate your business income from your personal holdings from the start, because the two are taxed very differently — income versus capital gains.
One point is worth repeating because it surprises most people: gas fees on personal NFT purchases are generally not deductible, even though they are a real cost. Only when you create and sell NFTs as a business may such costs be deductible as expenses. Given the mix of income, capital gains, and collectible rates across the US, UK, and Canada, and the way jurisdictions keep refining their positions, anyone with meaningful NFT activity should check current rules and, for larger portfolios, get advice from a qualified tax professional.
Frequently Asked Questions
Is buying an NFT with crypto a taxable event?
Yes in the US, UK, and Canada. Paying for an NFT with crypto disposes of that crypto, triggering capital gains on any increase in its value since you acquired it, even before you sell the NFT itself. Buying an NFT with fiat, by contrast, is not a disposal.
How are NFTs taxed in the United States?
The IRS treats NFTs as property, and for most NFTs classifies them as collectibles, so the long-term capital gains rate is capped at 28% — higher than the 20% maximum for stocks. Short-term gains are taxed at ordinary income rates of 10-37%, with reporting on Form 8949 and Schedule D.
What rate applies to NFT gains in the UK?
HMRC treats NFTs as cryptoassets, so disposals are subject to capital gains tax at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, with an annual exempt amount of £3,000. Creating and selling NFTs as a business instead attracts income tax.
How much of an NFT gain is taxable in Canada?
The CRA treats NFTs as commodities, and 50% of a capital gain is taxable (the inclusion rate), with the amount then taxed at your marginal rate, which ranges from roughly 20% to 53% depending on your province. Trading NFTs as a business would instead be taxed as business income.
PP
PaisayehPaisa Editorial Team
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