Crypto Staking Taxes – 2025 IRS Rules

Is crypto staking taxable income

In short, yes. In 2023, the IRS confirmed that staking rewards count as income once you control or transfer them. Consequently, you’ll owe income tax on the fair market value of your rewards when you receive them. If you later sell, trade, or spend those tokens, you’ll have a capital gains (or loss) event based on any price difference from when you first recognized them as income.

Calculate your crypto gains with our free crypto profit calculator.

What are crypto staking rewards

Staking rewards are the extra tokens you receive to help a blockchain validate transactions through a PoS mechanism. The value of these newly minted tokens is typically considered ordinary income when you have complete control over them.

Learn more about how crypto airdrops are taxed.

Staking rewards taxes

Staking rewards can generate two tax liabilities:

1. Income tax: You owe tax based on the coins’ fair market value (FMV) the moment you gain “dominion and control.”

2. Capital gains or losses: Once you dispose of the tokens, calculate the difference between their FMV at receipt and their value at sale.

See our expert picks of the best crypto wallets.

Do I need to report staking rewards under $600?

Yes. The IRS doesn’t offer a minimum threshold for crypto income—all staking rewards must be reported. While some platforms may only issue tax forms if earnings exceed $600, you must still include any income on your return.

Are staking rewards taxed twice?

Not exactly. First, you recognize ordinary income when you receive new tokens. Later, if you sell them for more (or less) than that initial amount, you have a capital gain (or loss). You’re not paying income and capital gains tax on the same appreciation. These are two separate taxable events.

How to report crypto staking rewards on taxes

Here are the key steps to report crypto staking rewards on your US taxes:

• Track the exact date and time you receive your staking rewards.

• Determine the fair market value in USD when you gain dominion and control.

• Keep thorough records of disposals, including dates, sales proceeds, and cost basis.

• Report total staking income on Form 1040 Schedule 1 (as “Other Income”).

• Report capital gains or losses from disposing of these tokens on Schedule D (and Form 8949 if needed).

• You may use Schedule C to reflect business income and potential deductions if you operate a staking business.

When in doubt, speak to a crypto tax professional.

When to recognize income from staking rewards

You must recognize income at the point you can transfer, sell, or otherwise use the coins (often called “dominion and control”). If the tokens are locked or restricted, you may delay reporting until those restrictions are lifted.

What is ‘dominion and control’ and how it relates to staking taxes

“Dominion and control” occurs once you are free to access, spend, or transfer your staking rewards without restriction. Until that moment arrives, the IRS generally does not consider you to have received taxable income.

How to reduce staking tax

Although you can’t eliminate your tax liability entirely, you can explore legitimate ways to lessen it:

• Hold tokens long enough for long-term capital gains rates (if you later sell).

• Offset gains with losses from other crypto trades (tax-loss harvesting).

• Deduct eligible business expenses if you operate your staking or node as a business.

• Consider relocating to a jurisdiction with more favorable tax laws if it suits your situation.

Learn more about how to reduce your crypto taxes.

Crypto staking taxes IRS forms

For most individuals, staking income goes on Form 1040 Schedule 1 under “Other Income.” When you sell or exchange those tokens, you record the resulting capital gains or losses on Schedule D (and Form 8949 if appropriate). Meanwhile, if you’re running a bona fide staking business, you might use Schedule C instead, which could allow for certain deductions related to equipment and other overhead.

Use our free crypto tax calculator.

Taxes on proof-of-stake rewards

The IRS clarified in Revenue Ruling 2023-14 that newly minted tokens from PoS staking are included in gross income once you hold them with no restrictions. You’ll owe:

1. Income tax: At the fair market value of your tokens when you obtain them.

2. Capital gains: For any subsequent appreciation from the time you received them to the time you sell.

Crypto staking tax outside the US

Regulations differ worldwide. Here’s a quick overview of how Australia, Canada, and the UK approach staking taxes:

How is crypto staking taxed in Australia

The Australian Taxation Office (ATO) generally treats staking rewards as ordinary income upon receipt. Capital gains rules may then apply if and when you dispose of those tokens for more or less than their original value.

How is crypto staking taxed in Canada

The specific treatment of staking in Canada (business income or capital gain) depends on your activities. If you’re frequently staking, advertising such services, or demonstrating an intent to profit in a commercial way, the CRA may view your rewards as business income, which must be reported in full for the year you receive them. If your staking is more passive, the rewards might be treated as capital gains, meaning you report only half of any net profit.

How is crypto staking taxed in the UK

Her Majesty’s Revenue and Customs (HMRC) typically views staking rewards as income when they’re received. Any future gains or losses from disposing of those tokens must be calculated for capital gains tax purposes.

Learn more in our useful country guides.

How TokenTax can help with your crypto staking taxes

TokenTax streamlines crypto accounting to make staking crypto taxes less stressful. Our platform lets you:

• Connect wallets and exchanges automatically

• Calculate both income and capital gains from staking events

• Access personalized help from our in-house crypto tax professionals

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