US lawmakers are demanding the IRS revisit cryptocurrency staking taxation rules and eliminate double taxation.
The proposed reforms include tax deferral and exemptions for minor crypto payments.
US legislators have urged the Internal Revenue Service (IRS) to reconsider taxation guidelines for cryptocurrency staking by 2026. Bipartisan support is growing in Congress for the concept of ending the dual levy currently applied to staking participants.
Eighteen congressmen from both parties put forward the proposal. In a letter to the acting IRS chief, Scott Bessent, they noted that the present rules unfairly tax staking rewards twice—upon receipt and upon asset sale.
The legislators suggest altering the approach. Specifically, exempting small stablecoin payments under $200 from tax is being discussed, alongside the option to postpone taxes on staking and mining earnings for up to five years. One author of the initiative is Congressman Mike Carey, who believes the existing system discourages Americans from joining blockchain networks and undermines US competitiveness.
Why current regulations cause outrage
The issue arose following an IRS clarification in 2023, stipulating that staking rewards are considered taxable income immediately upon receipt, even if their value is minimal. Upon subsequent sale, investors pay tax again—this time on capital gains.
Critics label this model as double taxation. In their view, stakers generate a new digital asset that should not be taxed until it is sold. Furthermore, complex tax regulations diminish interest in participating in Proof-of-Stake networks, on which blockchain security directly depends.
Besides Carey’s initiative, the PARITY bill has been introduced in Congress. It outlines an alternative mechanism for tax postponement lasting up to five years. Representatives of the crypto industry endorse the reform, stating that fair tax conditions are essential for growing blockchain infrastructure in the US.
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