US Lawmakers Call for IRS Review of Crypto Staking Tax Laws
A bipartisan group of 18 members of the US House of Representatives has urged the Internal Revenue Service (IRS) to review the country’s tax laws regarding cryptocurrency staking. Led by Republican Rep. Mike Carey, the lawmakers sent a letter to acting IRS Commissioner Scott Bessent, calling for a review of the existing tax rules before the 2026 tax year.
The letter requests that the IRS reconsider its 2023 guidance on staking rewards, which requires crypto investors to include staking rewards in their gross income once they have gained control over them, and again if those rewards are later sold at a different price. This results in double taxation, a point heavily criticized by crypto advocates. The lawmakers propose taxing staking rewards only at the time of sale, calling the change “critical to ensuring that stakers are taxed based on a correct representation of their actual economic profit.”
Background and Context
The IRS’s 2023 guidance on cryptocurrency staking rewards has been met with criticism from the crypto community, with many arguing that it leads to double taxation. The guidance requires crypto investors to report staking rewards as income when they receive them, and again if they sell those rewards at a different price. This can result in a significant tax burden for crypto investors, particularly if the value of the rewards fluctuates over time.
Industry leaders have supported the lawmakers’ initiative, stressing that it is critical for the US to maintain its position as a leader in the crypto industry. “Mining and staking are fundamental to securing public blockchains like Solana,” said Miller Whitehouse-Levine, CEO of the Solana Policy Institute. “The U.S. tax code should encourage this important infrastructure activity rather than imposing unfeasible compliance burdens on everyday Americans.”
Proposed Solutions
In addition to the letter sent to the IRS, lawmakers have introduced the PARITY Act, which proposes a different approach to taxing staking and mining rewards. The law would allow taxpayers to defer recognition of staking and mining awards for up to five years, rather than taxing them immediately upon receipt. The law also aims to ease tax obligations for crypto users by introducing exemptions for small stablecoin transactions from capital gains tax.
According to Ji Hun Kim, CEO of the Crypto Council for Innovation, “Staking is an essential part of modern blockchain infrastructure, and U.S. tax rules must reflect the economic reality of how these rewards are created and earned.” The proposed changes to the tax laws would provide clarity and certainty for crypto investors, and help to promote the growth and development of the crypto industry in the US.
For more information on the US lawmakers’ initiative to end double taxation on crypto staking, visit https://crypto.news/us-lawmakers-urge-irs-to-end-double-taxation-on-crypto-staking-before-2026/.
