How Do Staking Taxes Work For Crypto? (2026)

What is staking? 

Staking typically refers to participating in a Proof of Stake (PoS) blockchain’s governance process. 

In a PoS blockchain, cryptocurrency stakers temporarily lock their cryptocurrency to help validate transactions and maintain the security of the blockchain. In return, stakers receive cryptocurrency rewards, allowing them to earn a passive income! 

Staking can also refer to earning rewards from your cryptocurrency on a DeFi protocol. Certain protocols will give you rewards for adding liquidity to the platform. 

How is staking taxed? 

The IRS has released guidance that staking rewards are considered income based on their fair market value at the time of receipt. 

If you dispose of your cryptocurrency rewards, you’ll have a capital gain or loss depending on how the price of your staking rewards changed since you originally received it. 

The tax rate Cara will pay on this income depends on her tax bracket and holding period. 

When should I recognize income from my staking rewards? 

As discussed earlier, staking rewards are recognized as income based on the fair market value of your crypto at the time of receipt. However, in some situations, it can be unclear when ‘time of receipt’ takes place.

For example, many investors who earn staking rewards are unsure whether they should recognize income when the rewards are earned or when they withdraw their rewards into a personal wallet. 

To better understand when staking rewards are considered taxable, it’s important to understand the concept of ‘dominion and control’ (as described below).

What is ‘dominion and control’ and how does it relate to staking taxes?

Staking rewards are considered ‘received’ when investors have dominion and control over their coins and can freely sell and trade them. 

Investors have ‘dominion and control’ as soon as they have the ability to withdraw their staking rewards. In this case, the rewards may be considered “constructively” received. 

In other words, you’ll recognize income whether or not your coins are in your personal wallet or are in the hands of a third-party. As long as you have the ability to withdraw, it’s considered taxable income. 

Are there any situations where staking rewards are non-taxable? 

In cases where rewards cannot be withdrawn, it’s reasonable to take the position that your staking rewards aren’t income until you can sell, trade, or withdraw them. 

For example, some platforms gave users the ability to stake their Ethereum but restricted withdrawals until they were enabled in April 2023 (the Shanghai/Capella upgrade). In cases like these, you won’t have to recognize income until you have the ability to freely withdraw your crypto.

However, a limit on transfers alone may not delay your income. In a 2026 Tax Court case, rewards were income when they were credited because the investor could still sell them on the platform.

How is DeFi staking taxed?

In most cases, DeFi staking income is subject to income tax. 

However, some DeFi staking protocols leverage crypto-to-crypto swaps to allow users to stake/unstake crypto. It’s possible that these transactions may be subject to capital gains tax, like other crypto-to-crypto swaps. 

For more information, check out our guide to DeFi taxes. 

Are staking rewards taxed twice?

Just like other disposals of cryptocurrency, disposing of your staking rewards is considered a taxable event. However, it’s important to note that you won’t be taxed on the same profits twice. 

You are required to pay income tax on your crypto upon receipt and capital gains tax upon disposal.

When you dispose of cryptocurrency, you will incur a capital gain or loss based on how the price of your staking rewards has changed since you originally received them. Technically, you won’t pay capital gains tax on the same income.

What are staking pools? 

A staking pool allows investors to pool together their staked crypto. By combining their resources, investors can have a larger collective stake and increase the chance that they’ll be selected as a validator and earn staking rewards. 

Typically, pool operators will charge a fee or take a percentage of the staking rewards as compensation for their services. The operator manages the technical aspects of staking, such as maintaining the necessary infrastructure, ensuring uptime, and handling software updates. 

How are staking pools taxed? 

Earning staking rewards through a staking pool should be considered income at receipt, even if you do not withdraw your rewards. As stated earlier, you have ‘dominion and control’ over your coins as long as you have the ability to withdraw them.

Depositing and withdrawing your cryptocurrency from a staking pool is likely not considered a taxable event, just like other wallet-to-wallet transfers. 

What if I can’t determine the fair market value of my staking rewards? 

Not sure what the fair market value of your staking rewards were at the time of receipt? You may have trouble reporting your taxes. 

The exact time when you received your staking rewards may not be visible on the blockchain. If you find yourself in this situation, you can reach out to your tax professional to determine a reasonable method to report your staking income. 

Cryptocurrency tax software like CoinLedger can help. The platform’s historical price engine can help you determine the fair market value of your staking rewards over time. 

Can I deduct staking equipment? 

If you’ve bought your own validator equipment as part of a trade or business, you can write off the costs as an expense. This deduction is not available for individual taxpayers.

What tax forms will I receive for staking crypto?

If you staked cryptocurrency on a centralized exchange, you may receive the following tax forms. 

Form 1099-MISC: Exchanges generally send Form 1099-MISC (Box 3, other income) if they paid you $2,000 or more of rewards in 2026 ($600 or more for 2025). Ordinary income may include staking and other forms of cryptocurrency income, such as referral and interest rewards. You must report all of your staking income, whether or not you receive a form. 

Form 1099-DA: If you dispose of your staking rewards through a centralized exchange, you will receive Form 1099-DA showing your gross proceeds (what you received when you sold). Cost-basis reporting starting in 2026 applies to crypto you buy on the exchange. The rules don’t clearly cover staking rewards, so the basis box may be blank even for rewards earned in 2026. Your basis in a reward is its fair market value when you received it, the amount you reported as income. Moving crypto doesn’t change your basis, and you can report it yourself on Form 8949. 

At this time, decentralized applications do not send 1099 forms to customers or the IRS. You will not receive tax forms for staking on decentralized applications.

How to report staking rewards on your tax return 

Individual taxpayers can report their staking rewards on line 8v (digital assets) of Form 1040 Schedule 1.

Businesses that earn staking rewards as part of their trade can report their income on Schedule C. Any expenses related to staking can be written off (provided they can be proven and they are a necessary part of business operations).

If you disposed of your staking rewards, you should report your capital gain/loss on Form 8949 and Schedule D.

Your 2026 tax return is due April 15, 2027.

What have courts said about staking taxes?

In December 2021, the IRS offered to refund Joshua and Jessica Jarrett for taxes paid on their staking income from the Tezos blockchain. Many investors wrongfully believed that this meant that staking rewards would not be taxed as income. A federal court later dismissed the case as moot, without ruling on whether staking rewards are income. 

At the time, the IRS had not yet issued guidance on how staking is taxed. According to legal experts, the IRS offered a refund in this specific case to settle the matter without incurring legal costs and issuing definitive guidance. 

In Revenue Ruling 2023-14 (July 2023), the IRS ruled that staking rewards are income when you gain dominion and control over them. 

In June 2026, the Tax Court reached the same result in Paschall v. Commissioner. The taxpayer’s Cardano staking rewards on eToro were income when they were credited, even though eToro restricted transfers, because he could sell them for cash at any time. It’s a memorandum opinion, so it isn’t binding precedent, and the taxpayers represented themselves. The Jarretts have since filed a second refund suit, over their 2020 Tezos rewards.

Bills that would tax staking rewards only when you sell them have not become law. These include H.R. 9175, introduced in June 2026 and still in committee, and S. 2207, a bill Sen. Lummis introduced in mid-2025 that is still in the Senate Finance Committee. The House tax bill that advanced in committee in September 2026 (H.R. 10357) left that change out. Similar proposals have failed for years and may never become law, so plan on today’s rules.

How is crypto staking taxed in Australia?

In Australia, cryptocurrency staking rewards are taxed similarly to the United States. Staking rewards are taxed as income upon receipt and as capital gains upon disposal. 

How is crypto staking taxed in Canada? 

The CRA says staking rewards from a centralized platform are generally income when they’re credited to your wallet on the platform. Under the crypto tax rules in Canada, whether that income is business income or property income depends on your facts. 

How is crypto staking taxed in the UK? 

The HMRC treats staking rewards as income upon receipt. When you dispose of your staking rewards, you’ll have a capital gain or loss depending on how the value of your crypto changed since you originally received it. 

How can CoinLedger help?

Looking for an easy way to report your crypto taxes? Try CoinLedger, the platform trusted by more than 700,000 investors worldwide.

All you have to do is upload your staking rewards and other crypto transactions into the CoinLedger platform. Once you’re done, you’ll be able to generate a complete capital gains & income tax forms with the click of a button. 

Get started with a free preview report today.