A bipartisan group of 18 US House lawmakers is calling on the Internal Revenue Service to revisit how crypto staking rewards are taxed, arguing that current rules place an unnecessary burden on investors and risk slowing participation in blockchain networks.
Key Takeaways:
US lawmakers are urging the IRS to review crypto staking tax rules they say amount to double taxation. The group wants staking rewards taxed only when sold to better reflect real economic gains. Lawmakers warn current rules discourage staking and could weaken blockchain security and US leadership.In a letter sent Friday to IRS acting commissioner Scott Bessent, the lawmakers, led by Republican Representative Mike Carey, asked the agency to review and update guidance they described as “burdensome” ahead of 2026.
US Lawmakers Push to End “Double Taxation” of Crypto Staking Rewards
The group said staking rewards should be taxed only when sold, rather than when they are received and again upon disposal.
“This letter is simply requesting fair tax treatment for digital assets,” Carey said, adding that ending what lawmakers view as double taxation of staking rewards would be “a big step in the right direction.”
Under current interpretations, staking rewards are typically treated as taxable income at the moment they are received, based on their market value at that time.
Lawmakers argue that this approach fails to reflect actual economic gains, particularly in volatile markets, and creates complex reporting obligations for everyday users.
The letter contends that taxing rewards at the time of sale would better align with how capital gains are calculated across other asset classes.
“Stakers are taxed based on a correct statement of their actual economic gain,” the lawmakers wrote, describing the change as a way to reduce friction without weakening tax compliance.
The group also warned that the existing framework discourages participation in staking, which plays a central role in securing proof-of-stake blockchains.
“Millions of Americans own tokens on these networks,” the letter said. “Network security — and American leadership — requires those taxpayers to stake those tokens, but today the administrative burden and prospect of over taxation discourages that participation.”
Lawmakers asked the IRS whether any administrative barriers stand in the way of updating the guidance before the end of the year, framing the request as consistent with broader efforts to strengthen US leadership in digital asset innovation.
US Lawmakers Propose Tax Relief for Small Stablecoin and Staking Transactions
Before this, Representatives Max Miller and Steven Horsford introduced a separate discussion draft aimed at easing crypto tax obligations, including an exemption for small stablecoin transactions and new options for staking and mining rewards.
Rather than fully overhauling staking taxes, that proposal would allow taxpayers to defer income recognition on staking or mining rewards for up to five years.
Supporters say the measure could provide relief while lawmakers and regulators work toward longer-term clarity.
The bill also extends several securities tax rules to digital assets.
It would apply wash sale restrictions to cryptocurrencies, limit strategies designed to lock in gains while delaying taxes, and extend securities lending treatment to qualifying crypto loans involving fungible, liquid assets. NFTs and illiquid tokens would be excluded.
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