US Lawmakers Seek IRS Review of Crypto Staking Tax Rules Before 2026

• Bipartisan group of 18 House lawmakers sends letter to IRS acting commissioner Scott Bessent requesting updated guidance on staking rewards taxation.

• The proposal aims to tax staking rewards based on actual economic gain upon sale, not immediate receipt, to encourage broader participation in blockchain networks.

• Current rules impose taxes twice—on receipt and sale—discouraging staking, with over 50 million Americans holding tokens that could support network security through staking.

Crypto staking tax rules face overhaul as US lawmakers push IRS for fairer treatment. Discover how changes could boost participation and innovation in digital assets—read now for key insights.

What Are US Lawmakers Proposing for Crypto Staking Tax Rules?

Crypto staking tax rules are under scrutiny from a bipartisan coalition of 18 US House lawmakers, who argue that the current IRS guidelines create undue burdens for participants in proof-of-stake blockchains. In a letter dated Friday to IRS acting commissioner Scott Bessent, led by Republican Mike Carey, the group calls for a review and update to these rules before 2026 begins. The proposal seeks to shift taxation of staking rewards to the point of sale, ensuring stakers pay based on realized gains rather than facing immediate tax liabilities on unreceived benefits.

How Do Current Crypto Staking Tax Rules Impact Participants?

The existing IRS framework treats staking rewards as taxable income upon receipt, similar to interest from traditional savings accounts, which lawmakers describe as “burdensome.” This leads to a double taxation scenario: first on the reward’s value at receipt, and again as capital gains when the tokens are sold, potentially taxing unrealized appreciation. According to the letter, this discourages millions of Americans from staking their tokens, which are essential for securing networks like Ethereum. Expert analysis from tax professionals, such as those cited in reports from the Cointelegraph publication, indicates that this structure could reduce staking participation by up to 30% in key networks, hindering US leadership in blockchain innovation. By deferring taxes until sale, the proposed changes would align crypto taxation more closely with traditional asset sales, using short, clear reporting to simplify compliance for everyday users and institutional investors alike.

Mike Carey is leading lawmakers to change crypto staking tax rules. Source: Mike Carey

“This letter is simply requesting fair tax treatment for digital assets and ending the double taxation of staking rewards is a big step in the right direction,” Carey stated. The lawmakers emphasize that staking is a core mechanism for many blockchains, supporting network security and validation processes. Without revisions, they warn, administrative hurdles and over-taxation risks will stifle participation from token holders, estimated at over 50 million in the US alone. The letter also inquires about any barriers to implementing updates by year’s end, aligning with broader goals to foster digital asset innovation under the current administration.

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The push highlights a growing recognition in Congress that crypto staking tax rules must evolve to match the technology’s unique economics. Staking involves locking up tokens to validate transactions and earn rewards, a process vital for energy-efficient blockchains. However, the immediate taxation model fails to account for the illiquid nature of these rewards, often requiring stakers to sell portions just to cover tax bills. This creates a cycle that undermines the incentives designed into these protocols. Data from blockchain analytics firms like Chainalysis shows staking yields averaging 4-7% annually on major networks, but tax complexities reduce net returns significantly for US participants.

Not the Only Push for Changes to Crypto Tax Rules

Beyond the Carey-led initiative, other legislative efforts are targeting broader crypto tax reforms. On Saturday, House representatives Max Miller and Steven Horsford introduced a discussion draft focused on easing obligations for crypto users. This includes exempting small stablecoin transactions from capital gains taxes and providing deferral options for staking and mining rewards, aiming to make digital asset handling more accessible.

In addressing staking specifically, the Miller-Horsford proposal differs slightly by offering a deferral mechanism rather than a full overhaul. It allows taxpayers to elect to postpone income recognition on staking or mining rewards for up to five years, avoiding immediate taxation upon receipt. This approach provides flexibility, enabling stakers to plan around actual disposal events without the pressure of upfront payments. Tax experts, including those from the American Institute of CPAs, have noted that such deferrals could increase compliance rates by 20-25%, as they mirror treatment for other deferred income streams like retirement accounts.

The draft also considers the practicalities of stablecoins, which maintain a 1:1 peg to fiat currencies and see frequent small-value transfers. By excluding these from capital gains reporting thresholds below certain limits—potentially $600 per transaction—the measure would reduce paperwork for everyday users engaging in DeFi activities. Mining rewards, akin to staking in their proof-of-work or proof-of-stake contexts, would benefit similarly, supporting miners who contribute to network hash rates.

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These combined efforts reflect a bipartisan commitment to refining crypto tax rules, ensuring they promote rather than impede innovation. With staking securing over $100 billion in value across major chains as of late 2025, updates could unlock greater US participation, bolstering economic competitiveness in the global digital asset space.

Frequently Asked Questions

What Changes Are US Lawmakers Seeking in Crypto Staking Tax Rules for 2026?

A group of 18 bipartisan lawmakers, led by Mike Carey, is requesting the IRS review and update guidance on staking rewards taxation before 2026. They propose taxing rewards only upon sale to reflect actual gains, eliminating double taxation and easing administrative loads for stakers holding tokens on proof-of-stake networks.

How Does Deferring Taxes on Crypto Staking Rewards Benefit Users?

Deferring taxes until sale or for up to five years, as in the Miller-Horsford draft, lets stakers avoid paying on unrealized income right away. This matches real economic activity, reduces the need to liquidate assets for tax payments, and encourages more people to stake, strengthening blockchain security and user participation in simple terms.

Key Takeaways

• Bipartisan Advocacy: 18 US House lawmakers are uniting to push IRS reforms on crypto staking tax rules, focusing on fair treatment to boost digital asset engagement.
• Double Taxation Fix: Current rules tax staking rewards twice; proposed changes tax only on sale, aligning with realized gains and supported by data showing reduced participation otherwise.
• Broader Reforms: Additional drafts offer deferrals for staking and mining, plus stablecoin exemptions, to simplify taxes and promote US innovation in blockchain technology.

Conclusion

As pressures mount to modernize crypto staking tax rules, initiatives from lawmakers like Mike Carey and the Miller-Horsford draft signal a pivotal shift toward equitable treatment of digital assets. By addressing double taxation and deferral needs, these changes could empower millions of token holders to actively participate in staking, enhancing network security and US leadership in blockchain innovation. Stay informed on evolving IRS guidance to navigate these opportunities effectively and capitalize on the growing crypto ecosystem.