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US lawmakers are stepping up efforts to reform how crypto staking rewards are taxed, aiming to eliminate what they describe as unfair “double taxation” before 2026. A bipartisan group of 18 House representatives has urged the Internal Revenue Service (IRS) to revisit its current guidance, arguing that existing rules place unnecessary administrative burdens on crypto participants and discourage staking across blockchain networks.
Led by Republican Congressman Mike Carey, the lawmakers believe updated tax treatment could strengthen US leadership in digital asset innovation while supporting network security for proof-of-stake blockchains.
Bipartisan Push for Reform
In a formal letter sent Friday to IRS Acting Commissioner Scott Bessent, the group of lawmakers requested a comprehensive review of the agency’s crypto staking tax rules. The letter highlights concerns that stakers are currently taxed twice—first when they receive staking rewards and again when they sell those tokens—regardless of whether any real economic gain has occurred.
“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. Lawmakers emphasized that the goal is not preferential treatment but consistency with how other forms of newly created property are taxed.
The bipartisan nature of the letter reflects growing agreement in Washington that crypto tax clarity is necessary as digital assets become more widely adopted by US households and institutions.
Why Double Taxation Matters
Under current IRS guidance, staking rewards are treated as taxable income at the moment they are received, based on their fair market value at that time. If the staker later sells those tokens, they may also owe capital gains taxes, even if the token’s price has fallen.
Lawmakers argue this framework effectively taxes unrealized gains and creates compliance challenges, particularly for retail investors. For frequent stakers, tracking the value of each reward at the time of receipt can become an overwhelming administrative task.
The letter proposes a simpler approach: taxing staking rewards only when they are sold. This would ensure stakers are taxed based on their actual economic gain, not hypothetical value at the time of token creation.
Impact on Network Security
The lawmakers also stressed that staking is not just an investment activity but a critical function of many blockchain networks. Proof-of-stake systems rely on token holders to secure the network, validate transactions, and maintain decentralization.
“Millions of Americans own tokens on these networks,” the lawmakers wrote. “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.”
By discouraging staking, current tax rules may unintentionally weaken blockchain security and reduce US participation in globally competitive digital infrastructure.
Timeline Before 2026
A key focus of the letter is timing. Lawmakers asked the IRS whether there are administrative barriers preventing updated guidance before the end of 2025. With major tax changes potentially looming in 2026, they argue now is the ideal window to address staking taxation without congressional gridlock.
The request aligns with the administration’s stated goal of strengthening US leadership in digital asset innovation. Clearer and fairer tax rules could provide regulatory certainty for developers, investors, and institutions building on US-based blockchain ecosystems.
Not the Only Tax Proposal
This push is not occurring in isolation. On Saturday, House Representatives Max Miller and Steven Horsford introduced a separate discussion draft aimed at easing tax burdens for everyday crypto users.
Their proposal includes exempting small stablecoin transactions from capital gains taxes, addressing one of the most common pain points for crypto payments. It also introduces a deferral option for staking and mining rewards.
Rather than eliminating immediate taxation entirely, the draft would allow taxpayers to defer income recognition on staking or mining rewards for up to five years. This approach offers flexibility while preserving the government’s ability to tax rewards in the future.
What It Means for Crypto
If adopted, these changes could significantly improve the attractiveness of staking for US investors and institutions. Reduced tax friction may encourage broader participation in proof-of-stake networks, supporting decentralization and network resilience.
For the crypto industry, the proposals signal a shift toward more practical, innovation-friendly regulation. While challenges remain, bipartisan engagement on staking taxes suggests lawmakers are increasingly aware of how outdated rules can slow blockchain adoption.
As 2026 approaches, the outcome of these efforts could shape the future of crypto participation in the United States.