US Congress Calls on IRS to Address Crypto Staking Tax Issues Before 2026

Lawmakers in the U.S. Congress are calling on the IRS to reassess how cryptocurrency staking is taxed, citing concerns for investors. Eighteen bipartisan members have formally requested a review of the IRS’s 2023 guidance on staking rewards before the 2026 tax year. Staking has grown into a significant income stream for crypto holders, but under current rules, they risk being taxed twice.

Why Are Lawmakers Raising Concerns?

Republican Representative Mike Carey led a group that sent a letter to IRS Acting Commissioner Scott Bessent asking for clarification on Revenue Ruling 2023-14. The ruling says investors must report staking rewards when they receive them and again if they sell at a different price. Critics say this leads to double taxation.

Carey said the letter is a step toward treating staking like normal investments, taxed only when sold. This could make it easier for people to follow the rules and avoid surprise tax bills from crypto price changes.

The lawmakers also asked if there are any obstacles that could stop the IRS from giving updated guidance before the 2026 tax year. Their letter shows the tension between old rules and the fast-changing crypto market.

Industry Response and the Broader Impact

Industry experts say the congressional proposal is a positive step, as fair taxes help the U.S. stay strong in blockchain. Miller Whitehouse-Levine, CEO of the Solana Policy Institute, said mining and staking are vital for security and warned that too much tax could discourage people from taking part.

Ji Hun Kim, CEO of the Crypto Council for Innovation, added that staking rewards are not the same as regular income. Tax rules that ignore this could hurt long-term holders and slow blockchain growth. How the IRS applies these taxes could affect adoption, network security, and the U.S.’s role in crypto markets.

The discussion also shows a bigger challenge: collecting taxes while keeping rules friendly to innovation. As digital assets become increasingly integrated with traditional finance, policymakers must establish rules that are fair and practical.

Legislative Efforts and Future Proposals

These issues have come up in Congress before. Last year, the Providing Tax Clarity for Digital Assets Act aimed to prevent double taxation on staking rewards, but it did not move forward.

Proud to introduce the bipartisan Providing Tax Clarity for Digital Assets Act with @RepWileyNickel to clarify within the tax code that digital asset rewards are to be collected at the point of sale, while codifying staking rewards as “created property.”https://t.co/Stoc4uvVay

— Congressman Drew Ferguson (@RepDrewFerguson) April 30, 2024

Recently, Representatives Steven Horsford and Max Miller introduced the PARITY Act, allowing taxes on staking and mining rewards to be delayed for up to five years.

The PARITY Act also aims to lower taxes on small stablecoin transactions, showing that lawmakers are starting to recognize the unique challenges crypto users face. While it’s still being under review, it signals a push to update U.S. tax policy for the modern economy.

How Could It Affect Investors?

If the IRS updates its rules, crypto investors could avoid being taxed twice on the same staking rewards. Right now, rewards are taxed when received and again when sold, which can cause extra financial stress. Updating the rules would show actual gains more clearly and could make people more willing to hold rewards for longer.