Staking rewards are the additional units of a cryptocurrency you receive for committing that asset to secure a proof-of-stake network. The network pays them for helping validate transactions, and they reach you in your own wallet, inside a stake position, or in an exchange or protocol account that stakes on your behalf.
A proof-of-stake network selects validators by the amount of its native asset they have staked, and pays them in newly issued units and transaction fees for producing and attesting to blocks. Anyone holding the asset can take part: by running a validator, by delegating to one, or through an exchange or liquid staking protocol that pools stakes and passes the rewards on after a fee.
How the reward reaches you depends on the route. A validator's rewards accrue to its own balance. Delegated staking rewards accrue to the delegator, sometimes claimable at any time and sometimes credited automatically. Exchange staking credits rewards to your account on the exchange's schedule. Liquid staking tokens deliver them as a rising balance or a rising redemption value. Each route produces the same economic result, more units than you started with, and a different record of when they became yours.
The reward rate is quoted as an annual percentage but paid continuously, per epoch or per block, so a year of staking produces hundreds or thousands of small receipts rather than one payment.
In the year you gain dominion and control over them. Revenue Ruling 2023-14 holds that a cash-method taxpayer who stakes cryptocurrency on a proof-of-stake network and receives additional units as validation rewards includes their fair market value in gross income for the taxable year in which the taxpayer gains dominion and control over them. The ruling applies the same rule whether the taxpayer stakes directly or through an exchange.
The rewards are ordinary income, not capital gain, and the amount is the fair market value in US dollars at the point of control. Under Notice 2014-21 the units received are property, so the included amount becomes their cost basis and their holding period starts on receipt. Selling or exchanging them later is a separate capital gain or loss event measured against that basis.
Timing is the part worked out case by case. Dominion and control is the ability to sell, exchange or otherwise dispose of the units. Rewards you can move the moment they are credited are income then. Rewards held under a lock-up are income when the lock ends. The date you withdraw, claim or sell is not the test on its own; it is evidence of when control existed, and it often arrives later than control did.
The accounting follows from that. Every reward receipt needs a timestamp, a quantity, a USD value at that timestamp and a lot record carrying that value forward as basis. Income for the year is the sum of those values, and the same figures reappear on the disposal side when the units are eventually sold.
Reward units with no basis attached. A wallet import often records the reward as income at the right value and then, because the lot is never created, treats the later sale of those units as if they were acquired for nothing. The same value is taxed twice: once as income, once as a capital gain measured from a zero basis. Across a year of small reward lots the double count is invisible until the disposals are reconciled against the income lines one lot at a time.
Read our Are Crypto Staking Rewards Taxed? Yes, Here's How in 2026
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