Delegated staking is staking through a validator someone else runs. You keep custody of your tokens and bond them to a validator of your choice, the validator does the work, and you receive a share of its rewards net of the commission it charges. Cosmos, Solana, Cardano, Polkadot and Tezos all work this way.
Delegating bonds your tokens to a validator's stake without transferring ownership of them. The validator's weight, and its rewards, rise with the delegations it holds, and it passes rewards through to each delegator in proportion, keeping a commission it sets itself. Your tokens stay at your address, or in a stake account you control, and you can undelegate at any time, subject to the chain's unbonding period, during which the tokens earn nothing and cannot be moved.
Chains differ in how rewards are delivered, and that difference drives the tax record. Cosmos chains accrue rewards in a distribution pool and pay them out when you send a claim transaction; redelegating or undelegating pays them out too. Solana credits rewards straight into the stake account each epoch, where they compound. Cardano accrues rewards to a reward address attached to your wallet each epoch and lets you withdraw them when you spend. Polkadot and Tezos pay out on their own schedules.
As ordinary income at fair market value in the year you gain dominion and control over them, under Revenue Ruling 2023-14. The income is the net reward that reaches you. The validator's commission was never yours, so it is neither income to you nor an expense you deduct; it is income to the validator.
Timing depends on the delivery mechanism, not on the claim. Rewards a chain makes claimable at any time are within your control from the point they can be claimed: nothing stands between you and the units except a transaction you can send whenever you choose. Rewards credited automatically into a stake account are covered under auto-compounded staking rewards, where the unbonding delay is the point to analyse. Whatever the mechanism, the date control arose fixes the USD value, the basis and the start of the holding period for that reward lot.
Undelegating is not a taxable event. The tokens that come back are the tokens you bonded, with their original basis and holding period, plus reward units with their own. Switching validators is likewise a transfer of the same property, though on some chains it settles the accrued rewards at the same time. What a validator earns on your delegation is its income, not yours.
Redelegation read as a sale. Moving a delegation from one validator to another is one transaction on most chains, and on Cosmos it also pays out the rewards accrued to that point. Software commonly imports it as an outgoing transfer to an unknown address, booked as a disposal of the entire delegated balance at market value, with the reward payout inside the same transaction either merged into the phantom proceeds or dropped. A single validator switch can put a gain on the return that never happened while the real income goes unreported.
Read our Are Crypto Staking Rewards Taxed? Yes, Here's How in 2026
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