IRS Crypto Staking Tax Guide for the US (2026)
Complete guide to reporting crypto staking rewards to the IRS. Covers the dominion and control principle, Form 8949 reporting, and the Jarrett case challenging current tax treatment.
The IRS is Watching Crypto More Than Ever
The Internal Revenue Service has significantly ramped up its focus on cryptocurrency taxation. The very first question on Form 1040 now asks about digital asset transactions, and the IRS has made it clear that crypto income cannot be ignored.
In 2023, the IRS issued Revenue Ruling 2023-14 which explicitly confirms that staking rewards are taxable income. If you're staking SOL, ETH, or any other cryptocurrency, you must report those rewards on your tax return.
"If a cash-method taxpayer stakes cryptocurrency native to a proof-of-stake blockchain and receives additional units of cryptocurrency as rewards when validation occurs, the fair market value of the validation rewards received is included in the taxpayer's gross income in the taxable year in which the taxpayer gains dominion and control over the validation rewards."
- IRS Revenue Ruling 2023-14
How Staking Rewards Are Taxed in the US
Under current IRS guidance, staking rewards are treated as ordinary income when you gain "dominion and control" over them. Here's how it works:
1. Dominion and Control Principle
You owe taxes when you have the ability to sell, exchange, or otherwise dispose of your staking rewards. For Solana, this typically means when rewards are credited to your stake account each epoch (every 2-3 days).
2. Fair Market Value at Receipt
The USD value of your rewards at the moment you receive them is your taxable income. This also becomes your cost basis for calculating capital gains if you later sell those tokens.
3. Ordinary Income Tax Rates
Staking income is added to your other income and taxed at your marginal rate. Federal rates range from 10% to 37%, plus any applicable state income taxes.
4. Self-Employment Considerations
If staking is your trade or business (e.g., running a validator node), you may owe self-employment tax (15.3%) and should report income on Schedule C. Casual staking is typically reported as "Other Income" on Schedule 1.
The Jarrett Case: Challenging IRS Treatment
The current tax treatment of staking rewards is being legally challenged. Josh and Jessica Jarrett from Tennessee filed a lawsuit arguing that the IRS is taxing staking rewards incorrectly.
The Jarretts' Argument
Staking rewards are "newly created property" - similar to a farmer growing crops, a baker baking bread, or an author writing a book. Under established tax principles, these items are only taxed when sold, not when created. Therefore, staking rewards should only be taxed when disposed of, not when received.
Case History
The Jarretts first filed their lawsuit in 2021 over Tezos staking rewards. The IRS offered them a full refund to avoid setting precedent, but the Jarretts rejected the offer to pursue a court ruling that would benefit all crypto stakers. They filed a new lawsuit in October 2024 to continue the fight.
Current Status
The case is still being litigated. Until there is a court ruling or legislative change, the IRS's current position (taxable at receipt) remains in effect. Taxpayers should continue to report staking rewards as income when received.
Important: Regardless of the Jarrett case outcome, taxpayers should continue reporting staking rewards as income under current IRS guidance to avoid penalties and interest. If the law changes, amended returns may be possible.
Important Dates for 2026 Tax Year
Tax Year End
December 31, 2026
The US uses a calendar tax year. All staking rewards received in 2026 are reported on your 2026 return.
Filing Deadline
April 15, 2027
Standard deadline for individual returns. Extensions available until October 15, 2027.
Example: Calculating Tax on SOL Staking Rewards
Let's say you received the following staking rewards during the 2026 tax year:
| Date | SOL Reward | Price (USD) | Value (USD) |
|---|---|---|---|
| Jan 15, 2026 | 0.5 SOL | $180 | $90 |
| Apr 15, 2026 | 0.5 SOL | $220 | $110 |
| Jul 15, 2026 | 0.5 SOL | $200 | $100 |
| Oct 15, 2026 | 0.5 SOL | $250 | $125 |
| Dec 15, 2026 | 0.5 SOL | $240 | $120 |
| Total | 2.5 SOL | - | $545 |
In this example, you'd report $545 USD as ordinary income from staking on Schedule 1. Each 0.5 SOL reward has its own cost basis - if you later sell the January reward for $150, your capital gain would be $150 - $90 = $60.
The Problem: Tracking Solana Staking Rewards
Tracking Solana staking rewards for tax purposes is challenging. Unlike some blockchains, Solana staking rewards don't appear as clear transactions. They're added directly to your stake account every epoch (every 2-3 days).
Popular tools like Koinly and CryptoTaxCalculator often struggle with native Solana staking rewards because:
- - They don't appear as standard transactions
- - Rewards are aggregated into your stake balance
- - You need to query the blockchain directly for this data
This is exactly why we built our tracker - to solve this specific problem for SOL stakers.
How to Get Your Staking Rewards Data
Use our free tracker to get all the data you need for your tax return:
Enter your Solana wallet address on our homepage
Select your date range (Jan 1, 2026 - Dec 31, 2026 for the 2026 tax year)
View all your staking rewards with USD values at the time of receipt
Export to CSV to share with your tax preparer or keep for your records
IRS Reporting Requirements
Here's where to report your staking income and any subsequent sales:
Schedule 1 (Form 1040)
Report staking rewards as "Other Income" on Line 8z. Enter the total USD value of all staking rewards received during the tax year.
Form 8949 & Schedule D
If you sell, trade, or dispose of staking rewards, report capital gains or losses on Form 8949. Your cost basis is the fair market value when you received the rewards. Summarize on Schedule D.
FBAR & Form 8938
If you hold crypto on foreign exchanges, you may have additional reporting requirements. FBAR applies if foreign financial accounts exceed $10,000. Form 8938 has higher thresholds. Consult a tax professional.
Tips for Staying IRS Compliant
Keep Detailed Records
Download and save your staking rewards data regularly. Record the date, amount, and fair market value for each reward. The IRS can audit up to 6 years back for substantial understatements.
Report All Income
The IRS receives information from major exchanges and uses blockchain analytics. Answer the Form 1040 crypto question honestly and report all staking income.
Use Accurate Valuations
Use the fair market value at the time of receipt, not when you sell. Our tracker provides historical USD values automatically.
Don't Forget State Taxes
Most states follow federal treatment of crypto. If your state has income tax, staking rewards are likely taxable there too. Some states (TX, FL, WY, etc.) have no income tax.
Consider a Tax Professional
If your crypto holdings are significant, consider consulting a CPA or tax attorney who understands cryptocurrency taxation.
Get Your Staking Rewards Report
Don't wait until tax season to figure out your staking rewards. Use our free tracker to see your earnings and download a report for your records.
Track My SOL Staking RewardsFrequently Asked Questions
What if I didn't report staking rewards in previous years?
You can file amended returns (Form 1040-X) for previous years. The IRS has voluntary disclosure programs for taxpayers who want to come into compliance. Consult a tax professional about your options.
Do I need to report if I haven't sold my rewards?
Yes. Under current IRS guidance, staking rewards are income when received, regardless of whether you sell them. You'll also have capital gains obligations if you later sell at a different price than your cost basis.
What records should I keep?
For each staking reward: the date received, amount of crypto, fair market value in USD, and transaction ID if available. Keep records for at least 3 years (6 years if you underreported income by more than 25%).
Can I claim losses if the price drops after I receive rewards?
Not directly. You still owe income tax on the value when received. However, if you sell the rewards at a loss, you can claim a capital loss that may offset other gains or up to $3,000 of ordinary income per year.
Is staking considered self-employment?
It depends on your situation. Casual staking for personal investment is typically not self-employment. However, if you operate a validator node or stake as a business activity, you may owe self-employment tax. Consult a tax professional.
Will the Jarrett case change how I file?
Not yet. Until there's a court ruling or IRS guidance change, you should continue to report staking rewards as income when received. If the law changes favorably, you may be able to file amended returns to claim refunds.