NFT Taxes: Creators, Flippers & Collectors

Short answer: NFT taxes depend on your role. Creators selling their own NFTs have ordinary income, and royalties are income when received. For traders and collectors, buying an NFT with crypto is two events – a disposal of the crypto paid, plus acquiring the NFT – and selling the NFT is a capital disposal. Under IRS Notice 2023-27, an NFT treated as a collectible can face the higher 28% long-term rate instead of 20%.

NFTs are taxed under the same property rules as other crypto – but your role decides whether the tax is income or capital gains.

How are NFT creators taxed?

Creators: selling an NFT you made is ordinary income (and a business if you do it regularly). Royalties from secondary sales are income when received. Gas paid to mint is a business expense or part of basis, depending on your status.

How are NFT traders and collectors taxed?

Traders and collectors: buying an NFT with crypto is two events – a disposal of the crypto you paid with, and an acquisition of the NFT. Selling the NFT is a capital disposal. Holding period works as usual – but the IRS’s 2023 look-through guidance (Notice 2023-27) can treat an NFT as a “collectible” if its associated right or asset is one, exposing long-term gains to the higher 28% collectibles rate instead of 20%. How long you held matters – see our guide to short- and long-term capital gains.

What records should NFT owners keep?

Practical tips: record the ETH/SOL value in dollars at every mint, purchase, and sale; treat wash-sale-style repurchases cautiously even though the rule doesn’t currently apply; and if you receive an NFT as an airdrop or promotion, its receipt value may be income. As with DeFi, documentation is what separates a defensible return from a guess.

Frequently asked questions

Do I pay tax when I buy an NFT with ETH?

Yes – buying an NFT with crypto is two events: a disposal of the crypto you paid with, which is a taxable gain or loss on that crypto, plus acquiring the NFT. The NFT’s cost basis is the dollar value of the crypto you paid.

What is the NFT collectibles rate?

Under the IRS’s 2023 look-through guidance (Notice 2023-27), an NFT can be treated as a collectible if its associated right or asset is one, exposing long-term gains to the higher 28% collectibles rate instead of 20%.

Are NFT royalties taxable?

Yes. Royalties from secondary sales are income when received. For creators, selling an NFT they made is ordinary income, and doing it regularly is a business.

Related guides

• DeFi Taxes: Swaps, Liquidity Pools, Lending & Wrapped Tokens
• How Crypto Is Taxed in the US: The Complete 2026 Beginner’s Guide
• How to Report Crypto on Your Taxes: Form 8949 & Schedule D, Step by Step

Sources

• IRS Notice 2023-27 – NFT look-through guidance: an NFT can be a collectible.
• IRS Notice 2014-21 – virtual currency is property.
• IRS Publication 544 – sales and other dispositions of assets.

This guide is general education only – not tax, legal or financial advice. Verify with the source authority and a qualified tax professional before filing.