Definition

Ordinary Income Tax

Meaning ⎊ A progressive tax rate applied to regular earnings like wages and short-term gains, often higher than capital gains rates.
Greeks.liveApril 1, 2026

Ordinary Income Tax

Ordinary income tax is the tax rate applied to income earned from regular sources such as wages, salaries, interest, and certain types of capital gains. In the crypto domain, short-term capital gains are frequently taxed at the same rates as ordinary income, which are typically higher than long-term capital gains rates.

Additionally, income earned from staking rewards, airdrops, or mining is often treated as ordinary income upon receipt. This means that these activities are taxed based on the fair market value of the assets at the time they are received.

Because ordinary income tax rates are progressive, higher earners may face significant tax burdens on their crypto-derived income. Understanding the distinction between ordinary income and capital gains is vital for effective tax planning.

Traders must ensure they categorize their income correctly to comply with tax laws.

Foreign Tax Credit Application
Marginal Tax Rates
Capital Loss Carryforward
Short-Term Capital Gain
Section 475 Election
Tax Avoidance Vs Evasion
Capital Loss Limitations
Tax Deductibility of Trading Losses

Glossary

Ordinary Income

Taxation ⎊ Ordinary income represents the classification of financial gains subject to standard marginal rates rather than preferential long-term capital gains treatment.

Capital Gains

Tax ⎊ Capital gains represent the fiscal difference between the adjusted cost basis of a digital asset and its realized disposition price during a taxable event.