Is crypto staking taxable?

Crypto staking is taxable in both the United States and the United Kingdom. In both countries, staking rewards are generally treated as income when you receive them, based on their value at that time. If you later sell or swap those rewards, that is a second taxable event that can produce a capital gain or loss.

Staking means locking up coins to help run a proof-of-stake network and earning new coins in return. Our guide to what crypto staking is explains the mechanics.

Are staking rewards taxable in the US?

Yes. In Revenue Ruling 2023-14, published in 2023, the IRS addressed taxpayers who use the cash method of accounting, meaning they count income when they actually receive it. It concluded that the fair market value of staking rewards is included in gross income in the tax year the taxpayer gains "dominion and control" over them. In plain terms, the clock starts when you are able to sell, transfer or otherwise use the new coins.

The ruling applies whether you stake directly on a network or through a crypto exchange. The IRS lists staking alongside mining as activities whose rewards are reported as income on Schedule 1 of Form 1040.

Is staking a taxable event when you sell the rewards?

Selling is a separate event. For crypto received as income, such as payment for services, IRS guidance says your basis, or starting value for tax purposes, is the dollar value you included in income. When you later sell, swap or spend them, the difference between that basis and what you get is a capital gain or loss. The IRS treats coins held for more than one year before disposal as long-term. Our guide to how crypto is taxed in the US covers capital gains in more detail.

Is staking income taxable in the UK?

Yes. HMRC's Cryptoassets Manual says that when staking is not a trade, the pound sterling value of tokens received is taxable as miscellaneous income at the time of receipt, and related expenses can be deducted. If the activity is organized and commercial enough to count as a trade, the rewards are instead treated as trading receipts.

HMRC weighs factors such as the degree of activity, organization, risk and commerciality to decide which applies. If you keep the rewarded tokens and later dispose of them, Capital Gains Tax may also be due. See how crypto is taxed in the UK.

What happened in the Jarrett staking case?

Joshua Jarrett and his wife received 8,876 Tezos tokens from staking in 2019. They paid tax on them, then sued for a refund, arguing that newly created tokens should be taxed only when sold. The IRS issued a refund check of about $4,000 including interest. The courts then dismissed the case as moot, meaning there was nothing left to decide, and the Sixth Circuit affirmed in 2023. No court ruled on the core question, so the IRS position in Revenue Ruling 2023-14 remains its stated view.

Rules differ by country and change often. Check the tax authority or a qualified professional for your own situation.