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Crypto Industry Pushes Congress for Mining and Staking Tax Relief
Crypto groups want mining and staking income taxed as capital gains, potentially halving the top rate from 37% to 20%. The push could ride on a year-end tax package.
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U.S. crypto advocacy groups are pressing Congress to classify mining and staking rewards as capital gains rather than ordinary income. The difference in tax rates is large. Ordinary income can hit 37% for top earners while long-term capital gains cap at 20% plus the net investment income tax.
Under current IRS guidance, miners and stakers owe income tax on the fair market value of rewards when they receive them. That means paying tax before selling, sometimes before the coins have a liquid price. A move to capital-gains treatment would delay the tax until the sale. For long-term holders, the rate cut alone could reduce federal tax liability by roughly half.
The cash-flow effect is sharpest for large mining operations. A firm receiving thousands of bitcoin a year pays income tax at marginal rates on the gross reward, before deducting power and equipment costs. Capital-gains treatment would let them sell first and pay later, aligning tax with actual cash proceeds.
Stakers face a different squeeze. A validator running a node on Ethereum or Solana collects incremental rewards. Each reward triggers a taxable event under the current rules. Stakers must track hundreds or thousands of small receipts, each at a different price, and pay ordinary income rates on them. The advocacy groups call the tracking burden itself a barrier to smaller stakers.
One legislative model is the proposed "Staking Tax Certainty Act." It would treat staking rewards as property created by the taxpayer, taxed only on sale. A companion bill for mining has been introduced in previous sessions but never reached a committee vote.