A bipartisan group of 18 US House lawmakers is asking the Internal Revenue Service to rethink how crypto staking rewards are taxed, warning that the current approach unfairly burdens investors and could slow participation in blockchain networks.
In a letter sent Friday to IRS Acting Commissioner Scott Bessent, the lawmakers—led by Republican Representative Mike Carey—urged the agency to review what they called “burdensome” guidance before 2026.
Lawmakers Say Current Rules Amount to Double Taxation
At the heart of the issue is when staking rewards should be taxed. Lawmakers argue that rewards should only be taxed when they’re sold, not when they’re first received and then taxed again when disposed of.
“This letter is simply requesting fair tax treatment for digital assets,” Carey said, adding that ending what lawmakers see as double taxation would be “a big step in the right direction.”
Under current interpretations, staking rewards are typically treated as taxable income as soon as they’re received, based on their market value at that moment. Lawmakers say this doesn’t always reflect real economic gains—especially in volatile crypto markets—and creates complicated reporting requirements for everyday users.
Instead, the group argues that taxing rewards at the point of sale would better match how capital gains are handled for other assets and would reduce unnecessary friction without undermining tax compliance.
“Stakers should be taxed based on their actual economic gain,” the lawmakers wrote.
Concerns Over Network Security and US Competitiveness
The lawmakers also warned that the current tax framework discourages people from staking altogether, which could weaken the security of proof-of-stake blockchains.
“Millions of Americans own tokens on these networks,” the letter said. “Network security—and American leadership—depends on those tokens being staked. Today, the administrative burden and risk of over-taxation discourages participation.”
The group asked the IRS whether there are any administrative obstacles to updating the guidance before the end of the year, framing the request as part of a broader push to keep the US competitive in digital asset innovation.
Related Efforts to Ease Crypto Tax Rules
The letter follows a separate proposal from Representatives Max Miller and Steven Horsford, who recently introduced a discussion draft aimed at easing crypto tax compliance more broadly.
That proposal includes exemptions for small stablecoin transactions and new options for handling staking and mining rewards. Rather than fully rewriting the rules, it would allow taxpayers to defer income recognition on staking or mining rewards for up to five years.
Supporters say the approach could offer near-term relief while regulators and lawmakers work toward clearer long-term rules.
The draft also proposes extending several existing securities tax rules to digital assets, including wash sale restrictions and limits on strategies designed to delay taxes while locking in gains. NFTs and illiquid tokens would be excluded.
