2025 IRS Exit Tax: What It Means for Crypto Investors and Cross-Border Taxpayers

When you give up your U.S. citizenship or long-term residency, the 2025 IRS exit tax, a one-time tax on unrealized gains for high-net-worth individuals leaving the U.S. doesn’t just apply to stocks and real estate—it includes your crypto holdings. If you’ve held Bitcoin, Ethereum, or any other digital asset that’s grown in value, the IRS treats it like any other asset when calculating your exit tax liability. This isn’t a future rumor—it’s an existing rule that’s being enforced more strictly as crypto wealth grows and more Americans move abroad.

The exit tax, a tax imposed on certain U.S. citizens and long-term residents who relinquish their status. kicks in if your net worth exceeds $2 million or your average annual net income tax over the last five years is over $184,000 (2025 thresholds). The IRS doesn’t wait for you to sell your crypto. It assumes you sold everything the day before you left and taxes you on the gain. That means if you bought 5 BTC at $10,000 each and it’s now worth $70,000, you’re taxed on $300,000 in gains—even if you still hold it. This rule also applies to tokens, NFTs, and staking rewards that haven’t been cashed out. Many people don’t realize their DeFi positions or locked liquidity pools count too.

And it’s not just about the tax itself. The expatriation tax, the formal term for the IRS exit tax under U.S. tax code Section 877A. comes with reporting requirements that can trap the unprepared. You must file Form 8854, prove you’ve been tax-compliant for the last five years, and disclose all foreign financial accounts—even if you’re moving to a country with no crypto reporting rules. If you’ve used non-U.S. exchanges like Binance or KuCoin, the IRS still expects you to report those holdings. Failing to do so can trigger penalties, audits, or even loss of future U.S. re-entry rights.

There’s no official 2025 update to the exit tax law itself, but enforcement is tightening. The IRS now cross-references crypto exchange data, blockchain analytics firms, and foreign bank disclosures to track digital asset transfers. If you’re thinking about leaving the U.S. and you’ve made gains in crypto, waiting until the last minute could cost you hundreds of thousands. Planning ahead matters. You might be able to reduce your liability by gifting assets, timing your exit after a market dip, or using tax-loss harvesting—but you need to act before you give up your status.

What follows are real-world guides and case studies from people who’ve navigated this exact situation. You’ll find breakdowns of how crypto gains are calculated under the exit tax, comparisons with how other countries handle digital asset taxation, and step-by-step checklists to avoid common mistakes. Whether you’re holding a few thousand in Bitcoin or managing a multi-million-dollar DeFi portfolio, this collection gives you the facts—not the fluff—so you know exactly where you stand before making a life-changing decision.