18 bipartisan U.S. House lawmakers have urged the Internal Revenue Service to reexamine the country’s taxation laws on cryptocurrency staking.
Summary
- A group of U.S. lawmakers has urged the IRS to review its 2023 guidance on staking rewards before the 2026 tax year.
- The letter recommends taxing staking rewards only at the time of sale to avoid double taxation.
- Separately, lawmakers have introduced the PARITY Act, which suggests allowing deferral of staking and mining tax liabilities.
Led by Republican Representative Mike Carey, the group has sent a letter to IRS acting Commissioner Scott Bessent, requesting a review of existing tax rules.
“We write today to follow up on concerns regarding the Internal Revenue Service’s 2023 guidance on the treatment of cryptocurrency staking rewards, Revenue Ruling 2023-14 (the ‘Ruling’). Specifically, we request additional information on the rationale and analysis underlying the Ruling and urge the IRS to promptly review and update guidance on this issue before the 2026 tax year begins,” the letter states.
Under the IRS’s 2023 guidance, crypto investors are required to include staking rewards in their gross income once they gain dominion and control over them, and again if those rewards are later sold at a different price. That second transaction must be reported as a capital gain or loss.
As a result, this leads to a double taxation event, a point that has been heavily criticized by crypto proponents.
In a separate statement, Carey said the letter seeks to end this double taxation of staking rewards, calling it “a big step in the right direction.”
To address this issue, the lawmakers suggest taxing staking rewards only at the time of sale, framing the change as “critical to ensuring that stakers are taxed based on a correct statement of their actual economic gain, are able to hold their staking rewards throughout the year without facing unreasonable tax risk in the event of price changes.”
Lawmakers have also asked the IRS to clarify if there are any “administrative barriers” that could prevent the agency from issuing updated guidance before 2025 comes to a close.
Several industry leaders have supported Carey’s initiative as they stress that this is essential for the U.S. to retain its position as the crypto capital of the world, in line with President Donald Trump’s administration, which has consistently maintained a strong pro-crypto stance.
“Mining and staking are fundamental to securing public blockchains like Solana. The U.S. tax code should encourage this critical infrastructure activity rather than impose unworkable compliance burdens on everyday Americans. Fair taxation isn’t just good policy, it’s essential if America wants to remain the crypto capital of the world,” said Miller Whitehouse-Levine, CEO of the Solana Policy Institute.
“Staking is an essential component of modern blockchain infrastructure, and U.S. tax rules must reflect the economic reality of how these rewards are created and earned.” added Ji Hun Kim, CEO of the Crypto Council for Innovation.
Last year, bipartisan lawmakers Wiley Nickel and Drew Ferguson introduced the Providing Tax Clarity for Digital Assets Act to clarify taxation around staking rewards and eliminate double taxation. However, the bill stalled in committee and did not advance.
More recently, Representatives Steven Horsford and Max Miller have introduced the PARITY Act, which proposes a different approach by allowing taxpayers to defer recognition of staking and mining rewards for up to five years, rather than taxing them immediately upon receipt.
Beyond staking, the legislation wants to ease tax obligations on crypto users by introducing exemptions for small stablecoin transactions from capital gains taxes.
