Lawmakers urge IRS to fix crypto staking tax rules by 2026
A bipartisan group of 18 U.S. House members has urged the Internal Revenue Service to revise its guidance on taxation of cryptocurrency staking rewards before the start of 2026.
In a letter sent Friday to acting IRS commissioner Scott Bessent and led by Republican Mike Carey, the lawmakers asked the agency to update what they described as burdensome rules that create administrative complexity and could overtax unrealized gains. Carey said the request seeks equitable tax treatment for digital assets and that ending the double taxation of staking rewards would be a significant step.
The letter recommends taxing staking rewards when they are sold, asserting that this approach would ensure taxpayers are assessed based on their actual economic gain.
According to the lawmakers, current guidance can result in taxation when rewards are received and again upon sale, which they argue discourages participation in staking despite its importance to certain blockchain networks. They wrote that millions of Americans hold tokens on these networks and that network security and U.S. leadership depend on the ability of those taxpayers to stake without excessive administrative burdens and the prospect of overtaxation.
In the letter, the lawmakers also asked whether any administrative hurdles would prevent updated guidance by year-end and said changes should align with the administration’s stated objective of strengthening U.S. leadership in digital asset innovation.
Additional efforts to revise cryptocurrency tax rules
On Saturday, Representatives Max Miller and Steven Horsford released a discussion draft that seeks to reduce tax obligations for crypto users by exempting small stablecoin transactions from capital gains taxes and offering a deferral option for staking and mining rewards.
For staking, the draft takes a different approach by allowing taxpayers to elect to defer income recognition on staking or mining rewards for up to five years, rather than being taxed immediately upon receipt.
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