A bipartisan group of 18 U.S. House members led by Representative Mike Carey has urged the Internal Revenue Service to revise crypto staking tax rules before the 2026 tax year. In a letter sent on December 19, 2025, to Acting Commissioner Scott Bessent, the lawmakers argue that current guidance imposes what they describe as double taxation and threatens U.S. innovation in digital assets.
The letter seeks a comprehensive review of Revenue Ruling 2023-14, which the lawmakers say treats staking rewards as taxable income when received and again as capital gains when disposed. They contend that this treatment distorts economic reality and increases compliance complexity for retail investors, potentially discouraging participation in proof-of-stake networks.
Representative Mike Carey summarized the central grievance: “Ending this double taxation is key to fair treatment of digital assets,” reflecting lawmakers’ claim that the current framework taxes theoretical gains rather than realized economic outcomes.
The group also asked the IRS to identify any administrative or technical barriers to issuing revised guidance before the close of 2025, underscoring the urgency ahead of the 2026 tax year.
Proposed changes to crypto staking tax rules
Lawmakers and supporting industry stakeholders outlined specific reforms in their letter and related legislative drafts, seeking to align tax recognition with realized gains, reduce friction for small transactions, and harmonize treatment across digital asset activities.
Lawmakers proposed a shift taxation of staking rewards from receipt to the moment of sale, aligning tax recognition with realized gains rather than receipt-based valuation. Introduce a $200 exemption for small stablecoin transactions to reduce friction for retail payments and ordinary use.
Meanwhile, it will allow taxpayers to defer recognition of staking and mining income for up to five years under proposed elective provisions in the Digital Asset PARITY Act, introduced by Representatives Max Miller and Steven Horsford.
Apply wash sale restrictions to cryptocurrencies where appropriate and extend securities-lending tax treatment to qualifying crypto loans, while excluding NFTs and illiquid tokens from that treatment.
Proponents argue these changes would lower compliance burdens, reduce incentives to move development offshore, and better reflect how market participants realize value from staking. The PARITY Act is presented as a vehicle to create optional tax pathways and harmonize treatment across related activities such as mining and trading.
