Here’s what HIVE AI had to say about “How is cryptocurrency staking taxed in 2025?”:

Cryptocurrency staking taxation in 2025

Core rule for 2025

• Staking rewards are taxable as ordinary income when you gain dominion and control over the new units. Include the fair market value (FMV) of the rewards at that date/time in your gross income. The same rule applies whether you stake directly on a proof‑of‑stake protocol or through a centralized exchange. 1

Timing and dominion/control

• “Dominion and control” generally means the rewards are credited and you can sell, transfer, or otherwise dispose of them. If a protocol or program credits rewards but you cannot access or transfer them until they vest or unlock, inclusion is typically when they become accessible. 1

Reporting on your 2025 return (filed in 2026)

• You must answer the digital assets question “Yes” if you received new digital assets from staking during the year, and you must include the income on your return. Keep records of dates/times, quantities, and FMV in USD when you obtained control. 2
• The IRS has emphasized that digital‑asset income is taxable and that taxpayers should be prepared to include it; this includes staking rewards. 3

Basis and later disposition

• The FMV you include in income for staking rewards typically becomes your tax basis in those specific units. When you later sell or exchange them, you compute capital gain or loss against that basis, with a holding period starting when you gained dominion/control. Beginning January 1, 2025, the digital asset basis identification rules under §1.1012‑1(j) apply; the IRS provided transition and identification relief to help taxpayers allocate and identify basis at the wallet/account level. 4

Staking through exchanges

• If you stake via a centralized exchange and receive rewards, the same income‑inclusion rule applies at the time you control the rewards, not when the chain validates per se. 1

Estimated taxes and withholding

• Staking rewards generally arrive without tax withholding. If the amounts are material, consider making quarterly estimated tax payments to avoid underpayment penalties. The IRS reminds taxpayers that income from digital assets is taxable and should be included when computing estimates. 5

Business, SE tax, and other character issues

• Whether staking rises to a trade or business (potentially triggering self‑employment tax) is fact‑specific. The 2023 ruling intentionally did not address other legal regimes (for example, section 83 and related issues), so evaluate your facts and keep consistent treatment. 1

Fund and trust structures in 2025

• For pooled vehicles, the IRS provided a narrow path for certain investment trusts to authorize protocol staking without jeopardizing investment‑trust/grantor‑trust status, effective for tax years ending on or after November 10, 2025, with a specific amendment window. No inferences are made on other tax consequences (for example, ECI/UBTI). 6

Practical compliance checklist

• Track every reward lot with date/time and USD FMV when you can control it; include as ordinary income for that year. 1
• Answer “Yes” to the digital asset question if you received staking rewards; retain records to substantiate FMV and lot identification. 2
• Adopt wallet/account‑level basis identification consistent with the 2025 rules and available transition relief. 4
• Consider estimated payments to cover untaxed staking income. 5

Sources

1 – Rev. Rul. 2023-14 📄 Summarize
2 – IRS – Instruction 1040-SS Instructions for Form 1040-SS, U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico) 📄 Summarize
3 – IRS Newsroom – IR-2024-311 📄 Summarize
4 – Notice 2025-7 📄 Summarize
5 – IRS Newsroom – IR-2025-02 📄 Summarize
6 – Rev. Proc. 2025-31 📄 Summarize

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