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Crypto taxes in California (2026): federal + state basics

California gives crypto gains no break at all: no lower long-term rate, a top rate of 13.3%, and a conformity date frozen in 2015 that quietly breaks several federal rules of thumb.

Last reviewed: November 4, 2026 · Reviewed by the CryptoTaxAI editorial team · Sources

Short answer. Yes, California taxes crypto. Gains are ordinary income — there is no preferential long-term capital gains rate — under the regular brackets of 1% to 12.3%, plus a 1% Behavioral Health Services Tax on taxable income over $1 million, for a 13.3% top rate. Staking and mining income are ordinary income too. You report on Form 540, adjusting federal figures on Schedule CA (540).

Who has to file in California

California residents owe state tax on worldwide income, including every crypto sale, swap, or spend, wherever the exchange sits. File Form 540 if your California gross income clears the FTB filing thresholds for your status and age — most residents who must file a federal return must file a California one. Part-year residents and nonresidents with California-source income use Form 540NR; crypto gains of a nonresident are generally sourced to their home state, because crypto is intangible property, but California wages or business income can still create a filing duty.

The federal layer comes first

Every state discussion starts with the federal return, because the IRS decides what counts as a taxable event in the first place. Selling crypto for dollars, trading one coin for another, or spending crypto is a disposition: you compute gain or loss as proceeds minus cost basis, and the one-year holding line separates short-term from long-term results. Staking and mining rewards are ordinary income at fair market value when you gain dominion and control over them. Federal reporting runs through Form 8949 and Schedule D, summarized in our how-to-report guide, and the rate tables live in the 2026 capital gains guide. California then takes those federal results as a starting point only — the state conforms to the Internal Revenue Code as of January 1, 2015, so newer federal provisions may not carry over.

How California taxes crypto

California treats cryptocurrency as property, the same as the IRS, but the resemblance mostly ends there. The Franchise Tax Board states the key rule plainly: California does not have a lower rate for capital gains, and all capital gains are taxed as ordinary income. A coin held for five years is taxed exactly like a coin held for five days — the federal 0%/15%/20% long-term schedule simply does not exist at the state level.

Conformity is the second trap. California conforms to the Internal Revenue Code as it read on January 1, 2015, with many specific exceptions, rather than rolling forward automatically. Federal changes after that date — and long-standing federal benefits California never adopted, such as the Section 1202 qualified small business stock exclusion — do not reduce your California gain. Where your California gain differs from the federal figure, you reconcile the two on California Schedule D (540).

Staking rewards, mining income, airdrops, and crypto received for work are ordinary income when received, at the same graduated rates. California is also a community property state, which can affect how married couples filing separately split income and gains.

2026 California rates at a glance

Income typeCalifornia treatment
Short-term capital gainsOrdinary income — graduated 1% to 12.3%
Long-term capital gainsOrdinary income — same graduated 1% to 12.3% (no preference)
Top bracket (single, 2026)12.3% on taxable income over $768,213
Behavioral Health Services Tax+1% on taxable income over $1,000,000 (top rate 13.3%)
Staking, mining, airdropsOrdinary income at graduated rates
Most common middle bracket9.3% (single: $75,197 to $384,109 of taxable income, 2026)

Selected figures, single filers, tax year 2026 indexed schedule published by the FTB. Joint thresholds are roughly double through most brackets. Marginal rates apply only to income inside each band.

Where crypto lands on the California return

File Form 540 (Form 540NR for part-year and nonresidents). Your federal capital gain flows in through Schedule CA (540), the California adjustment schedule: the gain starts as the federal amount and is adjusted in the California column where state law differs. Attach California Schedule D (540) whenever your California capital gain or loss differs from the federal number — for example where a federal exclusion was not conformed to. The extra 1% tax over $1 million is computed on the Form 540 itself.

California-specific gotchas

  • No long-term discount, ever. Holding past one year saves federal tax but changes nothing in California — the single biggest surprise for California crypto sellers.
  • The 1% over $1 million. The Behavioral Health Services Tax (formerly the Mental Health Services Tax) stacks on top of the 12.3% bracket, so a large one-off gain can face a 13.3% marginal state rate.
  • 2015 conformity date. Federal rules enacted or changed after January 1, 2015 may not apply in California. Do not assume a federal treatment — including the QSBS exclusion — survives onto the state return.
  • Moving out does not rewind sales. California taxes residents on worldwide income; a gain realized while you were a California resident stays California-taxed even if you move before filing season.
  • Estimated payments. California's safe-harbor and estimate schedule (Form 540-ES) has uneven installments — the second quarter is only 30% — so a mid-year windfall needs a deliberate estimate, not four equal payments.

What to do: California checklist

  1. Pull your records together. Export every exchange and wallet history and save any Form 1099-DA you received — brokers report proceeds for 2025 sales, and the basis box may be blank or wrong.
  2. Reconcile before you compute. Run each 1099-DA through the free 1099-DA reconciler so the proceeds on the form match your own basis records before anything reaches a return.
  3. Finish the federal numbers first. Use the crypto tax calculator and the 2026 capital gains guide to get your short-term and long-term totals — {state} starts from them.
  4. Map the gain onto Form 540. Carry the federal result through Schedule CA (540), and attach California Schedule D (540) if the state figure differs from the federal one.
  5. Check estimates and deadlines. A large one-off gain can require estimated payments during the year, not just a balance due in April — see the estimated taxes guide.
  6. Keep the file. Transaction records, wallet addresses, and basis elections should be kept for years after filing; our record-keeping guide lists what to save.

Frequently asked questions

Yes. California taxes crypto gains as ordinary income at graduated rates of 1% to 12.3%, plus a 1% tax on taxable income over $1 million. There is no lower rate for long-term gains, and staking or mining income is ordinary income as well.
No. Unlike the federal system, California has no preferential capital gains rate. A gain on crypto held for more than a year is taxed at the same ordinary-income rates as a gain on crypto held for a week.
Your broker sends Form 1099-DA to the IRS and to you, not directly to the FTB. But California starts from your federal figures on Schedule CA (540), states exchange return information with the IRS, and the FTB actively matches income — report figures that agree with your federal return.
Staking and mining rewards are ordinary income in California when you receive them, valued in dollars at that time, at the same graduated 1% to 12.3% rates as other income. Selling the rewarded coins later is a second, separate taxable event.

Sources & verification

Rates verified November 2026 against the California Franchise Tax Board (ftb.ca.gov); check the current figures again before filing, because states adjust brackets and forms between seasons.

Not tax advice. Educational only — not tax advice. State tax rules, rates, and forms change; verify the figures on this page against the California Franchise Tax Board (ftb.ca.gov) or a qualified tax professional before you file.

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