US Lawmakers Urge IRS to End Crypto Staking Double Taxation Before 2026
Bipartisan Letter Asks IRS to Look Into
The lawmakers, led by Republican Representative Mike Carey, wrote a letter to IRS Acting Commissioner Scott Bessent asking for a quick review of the agency's 2023 guidelines in Revenue Ruling 2023-14.
The present rule requires crypto investors to disclose staking rewards as gross income as soon as they receive them. If those awards are sold later at a different price, the sale is taxed again as a capital gain or loss, meaning the same money is taxed twice.
"We are writing today to follow up on concerns about the Internal Revenue Service's 2023 guideline on how to tax Bitcoinoin staking rewards, known as Revenue Ruling 2023-14 (the 'Ruling').
The letter says, "Specifically, we want more information on the reasons and analysis behind the Ruling, and we urge the IRS to quickly review and update its guidance on this issue before the 2026 tax year begins."
The group suggests that taxes should be collected at the moment of sale, arguing that this will ensure stakers are taxed on their actual economic gain. They stressed the importance of letting holders keep their rewards all year long without worrying about extra taxes due to market price changes.
Carey said in a different statement that the initiative is important because it wants to remove the double taxation of staking rewards and is "a big step in the right direction." The lawmakers also asked whether any administrative issues could prevent the IRS from issuing new instructions before the end of 2025.
The Push Has Support From Industry Leaders
Important people in the crypto business have backed the move because they see it as necessary for the US to stay ahead in digital assets. This fits with the incoming Trump administration's pro-crypto stance.
Miller Whitehouse-Levine, CEO of the Solana Policy Institute, hailed the decision and said, "Mining and staking are essential to keeping public blockchains like Solana safe."
The U.S. tax law should support this critical infrastructure development rather than imposing excessive compliance requirements on regular people. If America wants to remain the crypto capital of the world, fair taxes are not only good policy but necessary.
Ji Hun Kim, CEO of the Crypto Council for Innovation, said the same thing: "Staking is an important part of modern blockchain infrastructure, and U.S. tax rules need to reflect the economic reality of how these rewards are made and earned."
These endorsements show how upset the rest of the industry is with the current rules, which supporters say stop people from participating in blockchain networks and coming up with new ideas.
Broader Legislative Efforts on Crypto Taxation
This letter is a follow-up to earlier efforts to address crypto tax issues. Last year, bipartisan lawmakers Wiley Nickel and Drew Ferguson sponsored the Providing Tax Clarity for Digital Assets Act. Its goal was to stop double taxation on staking rewards. But the bill got stuck in committee and didn't move further.
More recently, Representatives Steven Horsford and Max Miller put forward the PARITY Act. This bill takes a different approach by allowing taxpayers to wait up to 5 years to report staking and mining profits instead of paying them right away.
The law also aims to ensure that minor stablecoin transactions are not subject to capital gains tax. This might make things easier for regular users.