Crypto tax help for California
California taxes capital gains as ordinary income with no preferential rate of any kind, at rates reaching 13.3% once the 1% Mental Health Services surcharge on income above $1 million applies. It is the highest state rate in the country, and it lands on exactly the people this state produces most.
Founders and early employees with token grants, engineers paid partly in crypto, and long-term holders sitting on a decade of appreciation. The federal system rewards you for holding past a year. California does not, which makes the timing of a disposal and the accuracy of your cost basis worth more here than almost anywhere else.
How the IRS actually treats it
The IRS treats crypto as property, not currency, under Notice 2014-21. Every sale, swap and spend is a disposal that lands on Form 8949 and Schedule D, and the holding period decides everything. Hold past one year and you reach the long-term rates. Sell a day early and the whole gain is taxed as ordinary income.
Form 1099-DA changed the risk. Brokers report gross proceeds on sales made from 1 January 2025, and from 1 January 2026 they add cost basis for covered assets. Gross proceeds without basis is the trap. If you moved coins between wallets and exchanges, the IRS sees the sale price and not what you paid, so the figure on file looks far larger than your real gain until someone reconciles it.
What we see most in California
The cases that come to us again and again from this state.
Founder and early employee token grants
Grants, vesting and unlocks each create their own taxable moments. Treating the whole position as one disposal at sale is the most expensive mistake we unpick.
A decade of holding, no records
Long-term California holders often have basis spread across exchanges that no longer exist. Reconstructing it defensibly is the difference between a real gain and a phantom one.
Leaving California
Moving out does not retroactively change the treatment of gains accrued while you were resident. The state takes an active interest in the year you left and where you were when you sold.
What we do
Transaction reconciliation
We pull every exchange, wallet and protocol you have used, match transfers so they are not counted as sales, restore missing cost basis and build an audit-ready record.
US tax filing
Form 8949 and Schedule D prepared with the right cost basis method and carried into your Form 1040. You review and approve everything before we submit.
Notices and disclosure
Received an IRS CP2000 or a letter about digital assets? We rebuild the real position first, then deal with the correspondence from a footing of facts.
More detail on the US rules is on our US crypto tax guide, and the full service list is on crypto tax accountants.
California crypto tax questions we hear every week
Do I need a crypto tax accountant based in California?
Specialism matters more than geography. The work happens on-screen and every engagement runs over video calls and secure file sharing. What you need is someone who understands the federal treatment and the fact that California gives capital gains no preferential rate at all.
What is the California tax rate on crypto gains?
Capital gains are taxed as ordinary income at California rates, reaching 13.3% at the top once the 1% Mental Health Services surcharge on income above $1 million is included. Unlike the federal system, holding for more than a year does not reduce the California portion.
I was paid in tokens by a startup. How is that taxed?
Tokens received for work are ordinary income at their value on the date you receive them, for both federal and California purposes, and that value becomes your cost basis. Selling later is a separate capital gain or loss on the difference.
My exchange shut down and I have no records. Can it still be filed?
Yes, and this is a large part of what we do. We rebuild the history from on-chain data, surviving statements, bank records and transfer trails, then document how each figure was arrived at so the return is defensible if it is ever questioned.
Find out where you actually stand.
A free 30-minute review. We tell you what needs doing and what it costs, before you commit to anything.