Short answer: staking rewards are income at their USD value when you receive them. Report them on Schedule 1, or Schedule C if you run a business. That value becomes your cost basis, so when you sell the rewards later you report a gain or loss on Form 8949.
What the IRS sources say
- IRS.gov's digital assets page lists staking with mining and forks as income reported on Schedule 1.
- The Form 1099-DA instructions say brokers do not report rewards and staking payments on Form 1099-DA.
- Under Notice 2024-57, cited in the same instructions, brokers don't yet have to report staking transactions themselves, but that exception "does not apply to rewards or other compensation earned."
How to track it
- Record each reward's date, amount, and USD value when received.
- Add every wallet and validator address to one tracker.
- Check that tiny, frequent rewards are counted. They can push you into a higher software tier.
Both CoinLedger (code CRYPTOTAX10 for 10% off) and Koinly list staking support and produce income reports. Affiliate links; disclosure. More: software for DeFi and staking.
Running validators or lots of protocols? See DeFi crypto tax CPAs. General information, not tax advice.
FAQ
Are staking rewards taxable?
IRS.gov says income from staking is reported on Form 1040 Schedule 1 (or Schedule C if it's a business), valued in USD when you receive it.
Will my exchange report staking rewards on Form 1099-DA?
No. The Form 1099-DA instructions tell brokers not to report rewards and staking payments on that form.
What is my cost basis in staked rewards?
Generally the USD value you reported as income when you received them. Selling later creates a capital gain or loss on Form 8949.