Ahead of the April tax return filing deadline, it’s worth noting that Bitcoin mining and crypto staking still fall within the income tax bracket and face ‘burdensome’ double taxation.
Currently, the U.S. tax watchdog, the IRS (Internal Revenue Service), taxes staking rewards immediately upon receipt as income and again if you sell them later under capital gains tax.
In a letter last December, a group of lawmakers led by Mike Carey asked Scott Bessent, the Treasury Secretary and acting Commissioner of the IRS, for clarity on the tax treatment of crypto staking.
The lawmakers called the current tax regime ‘burdensome’ and out of touch with the underlying design of staking.
“U.S. taxpayers face a staking tax regime that is burdensome to comply with, difficult to administer, and out of step with this Administration’s priorities.”
They added,
“While the ruling offers an initial view on the treatment of staking rewards, it fails to accurately reflect the underlying technological and economic realities of staking and diverges from foundational principles of tax law.”
Source: House
According to the legislators, correcting the tax ruling would inform further deliberations on how to approach digital asset taxation, alongside a boost.
But over a month later, the IRS hasn’t responded to the letter, and the IRS loophole will continue into 2026 unless its prior guidance is corrected.
Alternative push for crypto tax
Even so, there have been attempts to address this issue through alternative proposals.
It’s worth pointing out that the Carey-led push for clarity came after pro-crypto Senator Cynthia Lummis’ tax amendment on the ‘Big Beautiful Bill’ failed to pass.
After the failed attempt in July, Lummis introduced a dedicated bill to address the same issue, but it has not progressed out of the committee yet as of writing.
Fast forward to October, and the Senate Finance Committee held a series of hearings with industry representatives.
In fact, in one of the meetings with Coinbase’s VP of Tax, Lawrence Zlatkin, argued that investors are avoiding U.S. validators or stakers due to the tax burden.
“This uncertainty pushes investors to avoid U.S. validators entirely. That outcome would be disastrous for U.S. competitiveness.”
These hearings were deemed the foundation for making informed decisions on future bills to address the tax issue.
In fact, some of these deliberations, including stablecoin exemptions for small transfers, have featured in the broader market structure bill, the CLARITY Act.
Overall, there is no final law for crypto staking tax as of early 2026. And the ongoing uncertainty on the market structure bill could also dim the outlook for near-term relief.
However, guidance from the IRS correcting the current tax regime can still help resolve the issue.
Final Thoughts
- The current U.S. regime taxes crypto staking twice, with critics calling it ‘burdensome’ and non-competitive.
- There are alternative solutions to the policy issue, including through the CLARITY Act, but only IRS guidance can correct it without extensive law amendments.