Free Tool
DeFi Tax Calculator
Estimate taxes on liquidity pools, yield farming, swaps, and lending. DeFi taxes are complex - understand your obligations.
Token Swaps
Trading one token for another on a DEX
Tax Treatment
Every swap is a taxable event. You dispose of one asset and acquire another, triggering capital gains/losses on the disposed token.
Example
Swap 1 ETH worth $3,000 for 3,000 USDC. If your ETH cost basis was $2,000, you have a $1,000 capital gain.
Liquidity Pools
Adding/removing liquidity from AMM pools
Tax Treatment
LP positions are highly complex. Depositing may trigger a taxable swap. Impermanent loss affects your cost basis. LP tokens may be considered new assets.
Example
Deposit $5,000 ETH + $5,000 USDC into Uniswap. This may be treated as exchanging both for LP tokens - potentially 2 taxable events.
Yield Farming
Earning rewards by staking LP tokens
Tax Treatment
Yield farming rewards are typically taxed as ordinary income when received. Each reward claim is a taxable event at fair market value.
Example
Claim 100 CAKE tokens worth $200. This is $200 of ordinary income, taxed at your income tax rate.
Lending Interest
Interest from lending protocols (Aave, Compound)
Tax Treatment
Interest earned is taxed as ordinary income. With rebasing tokens (aTokens), interest accrues continuously - each block could technically be a taxable event.
Example
Lend 10,000 USDC on Aave and earn 500 USDC interest over a year. The $500 is ordinary income.
DeFi Staking
Staking tokens in DeFi protocols
Tax Treatment
Staking rewards are generally taxed as income when received. The treatment may vary - some jurisdictions treat it as interest, others as miscellaneous income.
Example
Stake 32 ETH and receive 1.6 ETH in rewards over a year. At $3,000/ETH, that's $4,800 in taxable income.
Bridges
Moving tokens between blockchains
Tax Treatment
Bridge transactions may be non-taxable transfers, or they could be treated as disposals depending on jurisdiction and bridge mechanism. Wrapped tokens add complexity.
Example
Bridge 1 ETH from Ethereum to Arbitrum. Generally not taxable, but bridging to wrapped versions (WETH) may differ by jurisdiction.
Short-term taxed as income (10-37%). Long-term: 0-20% based on income.
Original cost basis of tokens used
Fair market value at time of transaction
Total value of rewards received (taxed as income)
Understanding DeFi Taxes
Token Swaps = Taxable
Every DEX swap is a taxable disposal. Trading ETH for USDC? That's a capital gains event on your ETH, even though you never touched fiat.
LP Tokens Are Complex
Adding liquidity may count as disposing of your tokens and receiving new LP tokens. Impermanent loss creates cost basis nightmares.
Rewards = Income
Yield farming and staking rewards are taxed as ordinary income when received. Every reward claim is a separate taxable event at FMV.
Lending Interest
Interest from protocols like Aave is income. Rebasing tokens (aTokens) that grow automatically make tracking even more complicated.
DeFi Makes Manual Tax Tracking Impossible
A single yield farming session can generate dozens of taxable events. Tracking cost basis across LP positions, reward claims, and token swaps requires specialized software.
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