How to Report Solana Staking Rewards on Your Taxes
If you stake SOL, you owe taxes on the rewards. Here's how it works, what the IRS expects, and how to calculate the numbers correctly.
When Are Staking Rewards Taxed?
The IRS treats staking rewards as ordinary income, taxed at your marginal income tax rate — the same bracket as your salary. The key question is when that income is recognized.
The current IRS position (confirmed in Revenue Ruling 2023-14) is that staking rewards are taxable the moment they are received — not when you unstake, not when you sell. The moment those SOL rewards appear in your wallet, you have taxable income.
- — The taxable amount is the fair market value of the SOL at the time it was received. This becomes your cost basis for calculating future capital gains if you later sell those tokens.
- — If you receive 1 SOL as a staking reward when SOL is trading at $150, you have $150 of ordinary income to report for that epoch.
- — Your cost basis in that 1 SOL is now $150. If you later sell it at $200, you owe capital gains tax only on the $50 gain — not the full $200.
- ✓ The tax event happens at receipt, not at unstaking or at sale. Mark your calendar accordingly.
How to Calculate Your Staking Income
Solana distributes staking rewards at the end of each epoch (roughly every 2–3 days). To calculate your income, you need the reward amount and the SOL price at the time of each distribution.
The formula is straightforward:
Your total staking income for the year is the sum of all per-epoch calculations. Report it on Schedule 1, Line 8z as "Other Income" with a description of "Crypto staking rewards."
Record Keeping Requirements Keep these
The IRS expects you to be able to substantiate any income or deduction if audited. For staking rewards, maintain a record of each epoch distribution with the following information:
- ✓ Date received — the timestamp of the epoch reward transaction on-chain. Block time is sufficient.
- ✓ Amount of SOL received — the exact reward amount to as many decimal places as the chain records.
- ✓ Fair market value in USD at receipt — the SOL spot price at that date and time. Note the source you used (CoinGecko, Coinbase, etc.).
- ✓ Transaction signature — the on-chain identifier that proves the transaction occurred. This is your audit trail.
- ✓ Validator info — the vote account or stake pool you delegated to. Not strictly required, but useful if questions arise.
Keep these records for at least 7 years — the standard IRS statute of limitations for tax records. A simple spreadsheet or CSV export is fine.
What About Liquid Staking? mSOL, jitoSOL, bSOL
Liquid staking protocols like Marinade (mSOL), Jito (jitoSOL), and Sanctum pools work differently from native staking. Instead of receiving discrete reward deposits each epoch, your liquid staking token accrues value — the exchange rate between mSOL and SOL increases over time.
- — Possible treatment #1 (receipt-based): Some CPAs argue that the accruing exchange rate constitutes receipt of income each epoch, similar to native staking. Under this view, you'd owe ordinary income tax as the value accrues.
- — Possible treatment #2 (disposal-based): Others argue that liquid staking is more like holding an appreciating asset, and you're only taxed on the gain when you eventually swap or unstake. Your entire gain from the original stake would be capital gains.
- — The initial swap from SOL to mSOL may itself be a taxable event (a token swap), potentially triggering capital gains on your SOL if it had appreciated since you acquired it.
- ! There is currently no definitive IRS guidance specifically addressing liquid staking tokens. This is an actively debated area. Consult a crypto-specialized CPA before deciding how to report.
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