US Lawmakers Push to End Crypto Staking ‘Double Taxation’ Before 2026

Bipartisan Lawmakers Call for IRS Review of Staking Tax Rules

A bipartisan group of 18 U.S. House lawmakers is urging the Internal Revenue Service (IRS) to reconsider how crypto staking rewards are taxed, arguing that current rules unfairly burden participants and risk overtaxing unrealized gains.

In a letter sent Friday to acting IRS Commissioner Scott Bessent, the lawmakers—led by Representative Mike Carey (R-Ohio)—called for updated guidance ahead of 2026, citing the growing importance of staking to blockchain networks and U.S. competitiveness.

“This letter is simply requesting fair tax treatment for digital assets, and ending the double taxation of staking rewards is a big step in the right direction,” Carey said.

Official letter

Why Lawmakers Say Staking Is Being Over-Taxed

Under current IRS guidance, staking rewards may be taxed when received and again when sold, creating what lawmakers describe as an unfair form of double taxation.

The letter argues that staking rewards should instead be taxed at the time of sale, ensuring taxpayers are assessed based on actual realized economic gains, rather than unrealized income.

“Stakers should be taxed based on a correct statement of their actual economic gain,” the lawmakers wrote.

Administrative Burden Discourages Network Participation

Lawmakers warned that the existing framework discourages participation in staking—an activity essential to the security and operation of many blockchain networks.

They emphasized that:

• Millions of Americans hold tokens on proof-of-stake networks

• Network security depends on active staking participation

• Excessive compliance requirements and over-taxation discourage engagement

“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,” the letter stated.

IRS Urged to Act Before 2026

The lawmakers concluded by asking whether any administrative barriers exist that would prevent the IRS from updating staking tax guidance before the end of the year. They argued that reform would align with the current administration’s goal of strengthening U.S. leadership in digital asset innovation.

Not the Only Effort to Reform Crypto Tax Policy

This push follows additional legislative efforts aimed at easing tax burdens on crypto users.

On Saturday, Representatives Max Miller and Steven Horsford introduced a discussion draft proposing:

• An exemption for small stablecoin transactions from capital gains taxes

• A deferral option for staking and mining rewards

Unlike Carey’s proposal, this approach would allow taxpayers to defer income recognition for up to five years, rather than eliminating immediate taxation entirely.

Two Approaches, One Goal

While the proposals differ in structure—immediate reform versus deferred taxation—both aim to reduce friction for crypto users and provide clearer, more practical tax treatment for staking and mining activities.

As policymakers continue to refine digital asset regulation, staking taxation is emerging as a key issue at the intersection of innovation, compliance, and economic competitiveness.

Conclusion: Momentum Builds for Staking Tax Reform

The growing bipartisan support for revisiting staking tax rules signals increasing recognition of crypto’s role in modern financial infrastructure. Whether through immediate changes or deferral mechanisms, lawmakers appear aligned on one point: current staking tax treatment needs reform to better reflect economic reality and support blockchain participation.

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