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- Debashree Patra
Debashree Patra
- Reviewed by:
Zameer Attar - Dec 22, 2025 10:13 UTC
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US Crypto Staking Tax Rules Face Pushback as Lawmakers Eye Changes by 2026
US lawmakers urge the IRS to reform crypto staking taxes, warning current rules unfairly tax rewards before sale and risk pushing blockchain innovation offshore.
Bipartisan pressure is growing to tax staking rewards at sale, not receipt, as industry voices warn outdated IRS guidance hurts participation and US crypto leadership.
Crypto staking is emerging as a major pressure point in US tax policy, with lawmakers now urging regulators to rethink how rewards are taxed. A bipartisan group of 18 members of the House of Representatives has formally asked the Internal Revenue Service to revisit its current approach, arguing that existing rules are misaligned with how staking actually works and risk pushing innovation offshore.
The effort is being spearheaded by Republican Representative Mike Carey, with lawmakers pushing for clarity and reform ahead of 2026.
How Current Tax Rules Penalize Stakers
Most importantly, under the current IRS guidance, staking rewards are treated as taxable income the moment they are received, even if the tokens cannot be easily sold. When those assets are eventually sold, they may face capital gains taxes again.
Lawmakers say this framework creates unnecessary complexity and exposes stakers to taxes on income they have not yet realized. Beyond paperwork, the bigger concern is participation. Staking is a foundational activity for many proof-of-stake blockchains, directly contributing to network security and functionality. Tax rules that discourage staking, lawmakers argue, weaken both the technology and the broader US crypto ecosystem.
Why Timing Matters More Than Ever
In their letter to the IRS, lawmakers call for a shift toward taxing staking rewards at the point of sale rather than at receipt. They argue this would align taxation with actual economic outcomes, ensuring people are taxed on real gains instead of theoretical valuations.
The group also asked whether administrative barriers are preventing the IRS from updating its guidance before the end of the year. They frame the issue as part of a larger national objective to maintain US leadership in digital asset development, rather than allowing regulatory friction to slow adoption.
Industry Voices Back Legislative Action
Crypto policy experts are echoing these concerns. Ji Kim, a prominent industry advocate, says staking is a core pillar of modern blockchain infrastructure and that current tax rules fail to reflect the economic reality of how rewards are earned. He argues the IRS’s 2023 guidance missed key nuances and diverged from long-standing tax principles, creating unnecessary compliance burdens.
Kim believes Congress has a crucial opportunity in 2026 to establish clearer, more workable rules that define when staking rewards should be taxed and how they should be sourced. In his view, modernization would promote fairness while strengthening the US position in digital asset innovation.
On the flip side, an X user known as Dragon argues that taxing rewards before they are sold amounts to double taxation and acts as a deterrent to participation. He says resolving this issue before 2026 is essential if the US wants to remain competitive in a new crypto scenario.
Together, these calls suggest growing momentum to fix staking taxes, with policymakers, industry leaders, and users increasingly aligned on the need for change.
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FAQs
No. The lawmakers’ letter is a request, not a mandate, and the IRS is not legally required to act without new legislation or internal rulemaking.
Yes. Policymakers may distinguish between solo stakers, validators, and users staking through exchanges, since each earns rewards under different economic conditions.
If uncertainty persists, blockchain firms and developers may favor jurisdictions with clearer tax treatment, potentially shifting jobs, infrastructure, and innovation abroad.
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