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Written by:

Miles Brooks

Written by:

Miles Brooks

Director of Tax Strategy

Miles Brooks holds his Master's of Tax, is a Certified Public Accountant, and is the Director of Tax Strategy at CoinLedger.

Reviewed by:

Jordan Bass

Reviewed by:

Jordan Bass

Head of Tax Strategy

Jordan Bass is the Head of Tax Strategy at CoinLedger, a certified public accountant, and a tax attorney specializing in digital assets.

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Our content is designed to educate the 700,000+ crypto investors who use the CoinLedger platform. Though our articles are for informational purposes only, they are written in accordance with the latest guidelines from tax agencies around the world and reviewed by certified tax professionals before publication. Learn More

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Key Takeaways

Crypto staking rewards are subject to income tax upon receipt and capital gains upon disposal.

Staking rewards should be reported as crypto income on Form 1040.

If you earned staking rewards this year, you owe money to the IRS.

In this guide, we’ll break down everything you need to know about how staking rewards are taxed. We’ll answer a few commonly asked questions about staking taxes and show you how you can report your staking income on your tax return in minutes. 

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 DeFiprotocol. Certain protocols will give you rewards for adding liquidity to the platform. 

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

Once you subsequently dispose of your cryptocurrency rewards, you’ll incur a capital gain or lossdepending on how the price of your staking rewards changed since you originally received it. 

Example: Staking tax

Cara earns $500 worth of ETH from staking.

The value of Cara’s ETH rises to $600.

Cara sells her ETH.

Cara recognizes $500 of income and $100 of capital gain.

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

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).

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 regardless if the coins are in your personal wallet or are in the hands of a third-party as long as you have the ability to withdraw them.

In cases where rewards cannot be withdrawn, it’s reasonable to take the position that your staking rewards are non-taxable. 

For example, some platforms gave users the ability to stake their Ethereum but restricted withdrawals until the Ethereum Mergewas completed. In cases like these, you would recognize income only when you have ‘dominion and control’ over your coins — in other words, when you have the ability to freely withdraw your crypto. 

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. 

Example: DeFi staking

Robert buys $700 of ETH.

The price of Robert’s ETH rises to $850.

Robert stakes his ETH on Lido and receives stETH.

Robert incurs a capital gain of $150.

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

If you dispose of your staking rewards in the future, your gains will be subject to capital gains tax.

You may be required to pay income tax on your crypto upon receipt and capital gains tax upon disposal. However, it’s important to note that you won’t be taxed on the same profits twice. 

When you dispose of cryptocurrency, you will incur a capital gain or lossbased 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.
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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. 

Earning staking rewardsthrough 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. 

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 professionalto 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. 

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.

Individual taxpayers can report their staking rewards as ‘Other Income’ on 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).

In December 2021, the IRS offered to refund Joshua and Jessica Jarrettfor 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. 

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. 

As of 2025, the IRS is clear in its guidance that staking rewards are considered income at the time of receipt. 

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. 

The CRA hasn’t released official guidance on how cryptocurrency staking istaxed in Canada. It’s likely that in most cases, staking rewards will be taxed as business income — because they were acquired with the intention of making a profit. 

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

Looking for an easy way to report your crypto taxes? Try CoinLedger — the platform trusted by more than 500,000 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. 

Frequently asked questions

Do you have to claim staking rewards on taxes?

All income from cryptocurrency — including staking rewards — should be claimed on your tax return.

Are unsold staking rewards taxable?

Staking rewards are considered income upon receipt. Because of this, you’ll recognize income tax on your staking rewards — even if you don’t sell!

Do I pay taxes on staked Ethereum?

Yes! Your rewards from staking Ethereum are subject to income tax upon receipt and capital gains tax upon disposal.

Is there capital gains tax on staking?

When you sell your staking rewards, you’ll pay capital gains tax depending on how the price of your crypto changed since you originally received it.

Is Coinbase staking taxable?

Just like staking rewards on other platforms, staking rewards earned on Coinbase are subject to income tax.

Can I deduct staking equipment on taxes?

Staking equipment is not tax deductible for individuals. However, it can potentially be deducted as an expense for a business.

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Written by:

Miles Brooks

Director of Tax Strategy

Miles Brooks holds his Master's of Tax, is a Certified Public Accountant, and is the Director of Tax Strategy at CoinLedger.

About the Author

Reviewed by:

Jordan Bass

Head of Tax Strategy

Edited by:

CoinLedger has strict sourcing guidelines for our content. Our content is based on direct interviews with tax experts, guidance from tax agencies, and articles from reputable news outlets.