Bipartisan US Lawmakers Push to End Double Taxation on Crypto Staking

TLDR

Table of Contents

A bipartisan group of 18 lawmakers requests IRS to review staking tax rules before 2026.
Current rules tax crypto staking rewards twice, creating an administrative burden for users.
Lawmakers propose taxing staking rewards only at the time of sale to reflect real gains.
Separate draft allows deferral of staking and mining income for up to five years.

A bipartisan group of 18 US House lawmakers is urging the Internal Revenue Service to review crypto staking tax rules before 2026. Lawmakers argue that current rules impose a double tax on staking rewards, creating administrative burdens and potentially over-taxing investors. The push aims to allow taxpayers to be taxed only upon sale, aligning tax obligations with actual economic gains from digital assets. The lawmakers emphasized that fair treatment is critical to support continued participation in staking networks.

Lawmakers Request Review of Staking Tax Rules

Republican Mike Carey leads the group asking the IRS to update guidance on crypto staking taxes. In a letter sent to Acting Commissioner Scott Bessent, the lawmakers described the rules as “burdensome” for stakers.

The letter asks for staking rewards to be taxed only at the time of sale. “This letter is simply requesting fair tax treatment for digital assets,” Carey said. Stakers would then be taxed based on their actual economic gain, not at reward receipt and sale.

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The lawmakers stressed that the current rules discourage participation in staking networks critical for blockchain security. They also highlighted that tax clarity is necessary to prevent confusion among investors and to ensure consistent enforcement.

Administrative Burdens and Double Taxation Concerns

Current IRS rules tax stakers twice: first when rewards are received and again upon sale.
Lawmakers note that millions of Americans own tokens that support blockchain networks through staking. The double taxation and administrative load reduce incentives for users to participate in staking. “Network security and American leadership require taxpayers to stake their tokens,” the lawmakers wrote.

The letter also inquires whether administrative barriers prevent guidance updates before the end of the year. It encourages changes to support the administration’s goal of strengthening US leadership in digital asset innovation. Lawmakers emphasized that clear rules could improve compliance while reducing unnecessary tax disputes and penalties.

Other Proposals Target Crypto Tax Adjustments

Separately, House representatives Max Miller and Steven Horsford introduced a draft proposal addressing broader crypto taxes.Their draft includes exemptions for small stablecoin transactions from capital gains taxes.It also provides a deferral option for staking and mining rewards, allowing income recognition to be delayed.

Taxpayers could elect to defer taxes for up to five years instead of immediate taxation.
This approach aims to ease the tax burden without fully rewriting current staking tax laws. It reflects an effort to balance compliance with incentives for digital asset participation and to ensure taxpayers have flexibility in managing staking income.

Implications for Stakers and the Crypto Market

The push by US lawmakers highlights growing attention on cryptocurrency taxation in Washington. Staking has become a critical feature of many blockchain networks, requiring clear and fair tax guidance. Changes to taxation timing could increase participation in staking and reduce compliance complexity.

Lawmakers from both parties emphasized the need to align tax rules with actual economic outcomes. The proposals also signal a broader trend toward revising rules for emerging digital asset technologies. US stakers may see practical changes if the IRS adopts updates before the start of 2026. Investors and blockchain developers are closely monitoring the situation, as the adjustments could impact staking adoption, network security, and long-term market growth.