US Crypto Staking Tax Rules Face Pushback as Lawmakers Eye Changes by 2026
Lawmakers are pushing back against current crypto staking tax rules, with potential changes on the horizon by 2026.
### The Pushback Gains Momentum
A growing chorus in Congress argues the existing framework treats staking rewards unfairly—taxing hypothetical income before users can actually access or sell their crypto. Critics call it a classic case of regulatory overreach, stifling innovation in one of finance's fastest-growing sectors. The push isn't coming from crypto die-hards alone; it's attracting bipartisan attention from legislators worried about America falling behind.
### The 2026 Timeline: Political Calculus or Real Deadline?
Why 2026? It lines up with the potential sunset of key provisions from the 2017 tax bill, creating a natural legislative vehicle. Supporters see a window to embed clearer, fairer rules for staking into the broader tax code. Skeptics whisper it's just another political promise—the kind that gets made, debated, and then forgotten when Wall Street lobbyists start writing checks. After all, traditional finance has spent decades perfecting the art of tax deferral; why should crypto be any different?
### What's at Stake for Investors
For anyone earning yield on their ETH or SOL, the outcome is crucial. A favorable shift could mean taxes apply only when rewards are sold or used—not the moment they hit your wallet. That's a game-changer for cash flow and long-term planning. It would treat staking more like mining or farming, aligning crypto with how other capital-intensive industries are taxed. The alternative? More complexity, more uncertainty, and more reasons for builders to take their projects offshore.
The fight over staking taxes isn't just about accounting—it's a referendum on whether the U.S. system can adapt to a new asset class. Get it right, and you fuel the next wave of financial innovation. Get it wrong, and you hand the future to other jurisdictions. The clock starts now.
Crypto staking is emerging as a major pressure point in US tax policy, with lawmakers now urging regulators to rethink how rewards are taxed. A bipartisan group of 18 members of the House of Representatives has formally asked the Internal Revenue Service to revisit its current approach, arguing that existing rules are misaligned with how staking actually works and risk pushing innovation offshore.
The effort is being spearheaded by Republican Representative Mike Carey, with lawmakers pushing for clarity and reform ahead of 2026.
How Current Tax Rules Penalize Stakers
Most importantly, under the current IRS guidance, staking rewards are treated as taxable income the moment they are received, even if the tokens cannot be easily sold. When those assets are eventually sold, they may face capital gains taxes again.
Lawmakers say this framework creates unnecessary complexity and exposes stakers to taxes on income they have not yet realized. Beyond paperwork, the bigger concern is participation. Staking is a foundational activity for many proof-of-stake blockchains, directly contributing to network security and functionality. Tax rules that discourage staking, lawmakers argue, weaken both the technology and the broader US crypto ecosystem.
Why Timing Matters More Than Ever
In their letter to the IRS, lawmakers call for a shift toward taxing staking rewards at the point of sale rather than at receipt. They argue this WOULD align taxation with actual economic outcomes, ensuring people are taxed on real gains instead of theoretical valuations.
The group also asked whether administrative barriers are preventing the IRS from updating its guidance before the end of the year. They frame the issue as part of a larger national objective to maintain US leadership in digital asset development, rather than allowing regulatory friction to slow adoption.
Industry Voices Back Legislative Action
Crypto policy experts are echoing these concerns. Ji Kim, a prominent industry advocate, says staking is a Core pillar of modern blockchain infrastructure and that current tax rules fail to reflect the economic reality of how rewards are earned. He argues the IRS’s 2023 guidance missed key nuances and diverged from long-standing tax principles, creating unnecessary compliance burdens.
Kim believes Congress has a crucial opportunity in 2026 to establish clearer, more workable rules that define when staking rewards should be taxed and how they should be sourced. In his view, modernization would promote fairness while strengthening the US position in digital asset innovation.
On the flip side, an X user known as Dragon argues that taxing rewards before they are sold amounts to double taxation and acts as a deterrent to participation. He says resolving this issue before 2026 is essential if the US wants to remain competitive in a new crypto scenario.
Together, these calls suggest growing momentum to fix staking taxes, with policymakers, industry leaders, and users increasingly aligned on the need for change.
