US Lawmakers Target Crypto Tax Breaks in Bipartisan Push

Congress is considering legislation that would eliminate a tax break for cryptocurrency investors. The proposal targets the 'wash sale' rule, which prevents investors from selling stocks or other securities at a loss and immediately repurchasing them to claim a tax deduction.

The distinction between cryptocurrencies and traditional investments allows crypto investors to sell assets like Bitcoin or Ether at a loss, buy them back right away, and still claim the realized loss for tax purposes. Stock investors, however, are generally barred from using this strategy due to the wash sale rule.

The proposed legislation would extend existing rules to cryptocurrencies, putting digital assets on equal footing with traditional investments. Supporters argue that this would close an unintended gap in the tax code and promote tax fairness. The bill has attracted bipartisan backing, but if approved, it could significantly change year-end tax planning for cryptocurrency investors.