US Lawmakers Urge IRS to End Double Tax on Crypto Staking

Highlights:

• Lawmakers ask IRS to review crypto staking tax rules before 2026.
• They propose taxing staking rewards only once to reduce challenges.
• Industry leaders support fair taxation to maintain U.S. crypto leadership.

A group of 18 bipartisan US House lawmakers is urging the IRS to review its rules on cryptocurrency staking taxes before 2026. Republican Mike Carey leads the group. On Friday, they sent a letter to IRS Acting Commissioner Scott Bessent. In the letter, the lawmakers request updated guidance on rules they describe as “burdensome.” 

Lawmakers Ask IRS to Make Crypto Staking Taxes Fair and Simple

Carey said the letter asks for fair tax treatment for digital assets. He explained that stopping the double taxation of staking rewards would be an important step forward. He added that taxing rewards twice, first when received and again when sold, creates extra challenges for people in the crypto market.

The lawmakers said current tax rules are stopping Americans from staking their tokens. Staking is an important part of many blockchain networks. The letter stated that millions of Americans own tokens on these networks. It added that network security and US leadership depend on taxpayers staking their tokens. However, the administrative burden and risk of being taxed too much are discouraging people from participating.

The letter asks the IRS to tax staking rewards only when they are sold, so stakers pay taxes based on their actual gains. The lawmakers also ask the IRS to clarify whether any administrative barriers could stop these changes before the end of the year. They say these updates would support the administration’s goal of strengthening US leadership in digital asset innovation.

“Millions of Americans own tokens on these networks,” the letter said. “Network security — and American leadership — requires those taxpayers to stake those tokens, but today the administrative burden and prospect of over taxation discourages that participation.”

Crypto Experts Support Carey

Several industry leaders have voiced support for Carey’s initiative, saying clear and fair taxation is important for keeping the U.S. as a global crypto hub. Miller Whitehouse-Levine, CEO of the Solana Policy Institute, said that mining and staking are key to securing public blockchains like Solana. He added that the U.S. tax code should support this important activity instead of creating difficult compliance burdens for everyday Americans. He emphasized that fair taxation is essential if America wants to remain the world’s crypto capital.

Ji Hun Kim, CEO of the Crypto Council for Innovation, said that staking is a vital part of modern blockchain infrastructure. He added that U.S. tax rules should reflect the real economic value of these rewards. These statements show growing concern that old tax regulations could reduce participation in important blockchain activities.

This effort is not the only one to ease crypto tax rules. On Saturday, House representatives Max Miller and Steven Horsford introduced a discussion draft focusing on smaller stablecoin transactions and staking income. Their draft proposes exempting minor stablecoin trades from capital gains taxes and letting people defer taxes on staking and mining rewards.

Instead of fully changing the rules, Miller and Horsford suggest that taxpayers could choose to defer income from staking or mining rewards for up to five years. This approach would give users more flexibility while keeping the current rules in place.