In the United States, the staking rewards tax rule comes from IRS Revenue Ruling 2023-14. Rewards are ordinary income equal to their fair market value at the moment you gain “dominion and control,” meaning you can sell, exchange or otherwise dispose of them. That value becomes your cost basis. When you later sell, swap or spend the tokens, you owe capital gains tax on any rise above that basis, or you can claim a loss on any fall. This applies to wallet and exchange staking alike. The UK, Canada and Germany also tax rewards as income on receipt.
Not tax advice: this page is general education based on published authority as of October 2026. Tax outcomes depend on your facts and jurisdiction, so consult a qualified tax professional before filing.
Key takeaways
- Under Rev. Rul. 2023-14, US staking rewards are income in the year you gain control of them, valued in dollars at that time.
- You can owe tax twice on the same tokens, but on different amounts: income when they arrive, then gain or loss on any later change in value when you dispose of them.
- Exchanges may send Form 1099-MISC for staking income. Form 1099-DA reports sales and exchanges, not reward receipts.
- Liquid staking tokens and rebasing tokens have no specific IRS guidance. Their treatment is unsettled.
- Bills to defer staking tax until sale have advanced in Congress but were not law as of October 2026.
Are staking rewards taxable? The IRS position
Revenue Ruling 2023-14, released on July 31, 2023, answers the question for cash-method taxpayers, which covers nearly all individuals. It says that a taxpayer who stakes native tokens on a proof-of-stake blockchain and receives validation rewards must include the fair market value of those rewards in gross income under Internal Revenue Code section 61. The income is recognised in the tax year the taxpayer gains dominion and control. The ruling expressly applies the same treatment to rewards earned through a cryptocurrency exchange.
Three practical consequences:
- Timing follows access. The ruling ties income to the point you can dispose of the tokens. Where rewards are locked and can’t be withdrawn or transferred, the date you gain control may be later than the date they were credited. That analysis depends on the facts, so document when rewards actually became available to you.
- Value in dollars on that date. Use a consistent, reasonable price source (an exchange rate at the time of receipt) and keep it.
- Basis equals the income you reported. If you reported $50 of income for a reward, your basis in that reward is $50, and your holding period for long- vs short-term gains starts then.
Earlier IRS guidance (Notice 2014-21 and later FAQs) already said that mining and similar rewards are income. Rev. Rul. 2023-14 settled the IRS’s position specifically for staking.
The Jarrett case: why some argue rewards shouldn’t be income
Joshua and Jessica Jarrett, Tezos stakers in Tennessee, argued that newly created tokens are new property and should be taxed only when sold, much as a farmer’s crop isn’t taxed until it’s sold. In their first suit, over 2019 rewards, the IRS refunded the tax they had paid, and the court dismissed the case as moot in 2022. The Sixth Circuit affirmed that dismissal in 2023, so there was no ruling on the merits. In October 2024 the Jarretts filed a second refund suit in the Middle District of Tennessee covering 2020 Tezos rewards. The IRS has defended it by relying on Rev. Rul. 2023-14. We found no ruling on the merits as of October 2026. A revenue ruling binds the IRS’s own positions but not the courts, so this case is worth watching.
Staking income tax in practice: a worked example
| Event | Hypothetical facts | US tax result |
|---|---|---|
| Reward received | 0.10 SOL credited and withdrawable when SOL = $150 | $15 ordinary income. Basis $15. |
| More rewards | Repeated every epoch through the year | Each receipt is income at its own price. Basis tracked per lot. |
| Sale after 8 months | 0.10 SOL sold when SOL = $200 | $20 proceeds minus $15 basis = $5 short-term capital gain |
| Sale after a price drop | 0.10 SOL sold when SOL = $100 | $10 proceeds minus $15 basis = $5 capital loss |
The figures are for illustration only. Notice that the income is taxed even if the token later crashes, and the capital loss doesn’t fully offset ordinary income because of annual loss limits. That’s why some stakers sell a portion of rewards as they arrive to cover the tax. Our guide to capital gains tax on crypto covers holding periods, rates and loss rules.
IRS staking rewards reporting: forms and schedules
- Form 1040 digital asset question. If you received staking rewards, you answer “Yes” to the digital asset question at the top of Form 1040.
- Schedule 1. Individuals who stake as an investment generally report rewards as other income. Schedule 1 has a dedicated line for digital assets received as ordinary income and not reported elsewhere.
- Schedule C. If staking is a trade or business, as it may be for someone running validators commercially, income and expenses go on Schedule C and self-employment tax can apply.
- Form 8949 and Schedule D. Report later sales, swaps and spending of reward tokens here.
- Form 1099-MISC. US exchanges such as Coinbase and Kraken may issue a 1099-MISC when your staking rewards reach the reporting threshold. You owe tax on rewards whether or not you get a form.
- Form 1099-DA. Brokers began reporting gross proceeds from digital asset sales for 2025 transactions, with cost basis reporting for covered assets acquired from 2026 onward. It reports dispositions, not the receipt of rewards. Our Form 1099-DA guide explains what it covers.
Liquid staking tax: the unsettled areas
Rev. Rul. 2023-14 deals with direct staking of native tokens. It doesn’t address liquid staking tokens (LSTs), and the IRS hasn’t issued LST-specific guidance. The open questions:
Lending, liquidity provision and swaps raise similar questions, which our guide to how DeFi activity is taxed covers in more detail.
- Is depositing ETH for an LST a taxable exchange? Swapping one token for another is usually a disposal. Some argue a deposit that you can redeem one-to-one is more like a receipt for property you still own. Practitioners disagree.
- Rebasing tokens (such as stETH, whose balance grows daily) look a lot like ongoing reward receipts. Many tax tools treat each balance increase as income.
- Value-accruing tokens (such as rETH, wstETH, cbETH, JitoSOL) don’t change your token count. The value builds up in the exchange rate, which some read as no income until you dispose of the token. That’s a position, not settled law.
Pick a reasonable, consistent method, document why you chose it, and discuss it with a preparer. Restaking adds another layer of reward types (points, AVS tokens) with similar uncertainty.
Pending US legislation on staking rewards tax
Congress has been debating whether to defer staking tax until sale:
- A proposal from Senator Lummis would create a new rule deferring income recognition for mining and staking rewards until the tokens are sold or otherwise disposed of.
- A bipartisan House draft known as the PARITY Act floated a middle path that would let taxpayers elect to defer tax on rewards for up to five years.
- In September 2026 the House Ways and Means Committee approved the Digital Asset Tax Certainty Act (H.R. 10357) by 38 to 5. It addresses mining and staking income alongside wash-sale and de minimis rules.
None of these was enacted as of October 2026. Until a law passes and takes effect, Rev. Rul. 2023-14 governs. Don’t file based on a bill.
Staking tax in the UK, Canada and Germany
Staking tax UK
HMRC’s Cryptoassets Manual (CRYPTO21200) says that if your staking doesn’t amount to a trade, which HMRC expects to be rare for individuals, the sterling value of tokens at receipt is taxable as miscellaneous income, less allowable expenses. If you later dispose of them, Capital Gains Tax applies to any gain above that value. HMRC’s separate guidance on DeFi lending and staking says some returns may be capital rather than income depending on the arrangement, so the structure of the product matters.
Canadian investors using an app-based account can read our review of Wealthsimple Crypto fees and custody, which covers its order fee and account types.
Canadian users choosing a platform can read our review of NDAX’s registration and Canadian custody, which covers its CIRO membership and flat trading fee.
Canada
The Canada Revenue Agency treats staking rewards as income at fair market value when received. Whether that’s business income or property income depends on how commercial your activity is. A later disposal produces a capital gain or loss, with the 50% inclusion rate applying to capital gains. See our Canada crypto tax guide.
Germany
Germany taxes staking rewards as other income on receipt, with a small annual exemption threshold for that income category. The Federal Ministry of Finance’s crypto guidance confirms that staking doesn’t extend the standard one-year holding period after which private crypto sales are tax-free.
Record-keeping tips for staking income
- Export reward histories from every exchange and wallet at least quarterly. Some platforms only keep a limited history.
- For self-custody staking, record the date and time, amount, token, dollar price, and transaction or epoch reference for each reward.
- Track basis by lot so later sales calculate correctly. Crypto tax software that connects to wallets and exchanges handles this at scale.
- Keep notes on any locked periods if you rely on a later dominion-and-control date.
- Set aside cash or stablecoins for the tax as rewards arrive.
For the broader rules (swaps, airdrops, losses), start with our crypto tax guide. For staking mechanics and the trade-offs between methods, see the crypto staking hub and how to stake crypto.
FAQ
Are staking rewards taxable if I don’t sell them?
In the US, yes. Rev. Rul. 2023-14 treats rewards as ordinary income when you gain dominion and control, whether or not you sell. Selling later is a separate taxable event that produces a capital gain or loss measured from the value you reported as income. The UK, Canada and Germany also tax rewards on receipt.
What does Rev. Rul. 2023-14 say?
Revenue Ruling 2023-14 says a cash-method taxpayer who receives staking rewards on a proof-of-stake network must include their fair market value in gross income in the year they gain dominion and control, meaning the ability to sell, exchange or otherwise dispose of the tokens. It applies the same rule when staking through a cryptocurrency exchange.
Where do I report staking income on my tax return?
Most US individuals report staking rewards on Schedule 1 of Form 1040 as other income, using the line for digital assets received as ordinary income. If staking is a business, it goes on Schedule C instead. Later sales of reward tokens go on Form 8949 and Schedule D. Answer “Yes” to Form 1040’s digital asset question.
How are liquid staking tokens taxed?
There’s no specific IRS guidance. Rebasing tokens like stETH are often treated as producing income with each balance increase, while value-accruing tokens like rETH or wstETH may arguably be taxed only on disposal. Whether depositing into an LST is itself a taxable swap is debated. Choose a consistent, documented approach with a tax professional.
Crypto is volatile and risky; this is education, not financial advice. Do your own research.
