Crypto Token Buy and Sell Tax Explained (and When It’s a Scam)
4 min read · Updated
Some tokens take a cut every time you buy or sell, called a tax or fee. A small tax can fund a project. A large or changeable one is one of the most common traps on BNB Chain, Ethereum and Base.
How token taxes work
The contract takes a percentage of each trade and sends it to a wallet, the liquidity pool or a burn address. A 5% sell tax means you receive 5% less than the trade is worth.
What is normal
Most memecoins have 0% tax. Projects with a tax usually stay at 0–5%. Anything above 10% makes trading expensive, and very high sell taxes (30%, 50%, 99%) are a soft honeypot: you technically can sell, but you lose most of your money doing it.
The real danger: changeable taxes
If the owner can change the tax, a token can launch at 0% and switch to 99% on sells once enough people have bought. Check whether the tax can be modified and whether ownership is renounced.
How to check
Paste the contract address into the CoinsWavez honeypot checker. It shows the current buy and sell tax and flags contracts where the owner can still change it.