US IRS: Staking Tokens Must Be Taxed

The IRS has declared that it considers tokens earned from crypto staking to be taxable and has rejected a lawsuit filed by investor Joshua Jarrett in Tennessee. Jarrett had previously won a settlement in a 2022 lawsuit, but the IRS seems determined to challenge the outcome in this new dispute.

As the practice of staking and restaking increases in the crypto industry, the verdict in this case could have implications for the growing number of US crypto users. In his lawsuit filed in October, Jarrett argued that tokens earned through staking should be classified as new property rather than taxable income under the law.

He sought a refund of $3,293 in taxes paid on 8,876 Tezos tokens earned through staking. Jarrett had filed a similar lawsuit in 2022, which was resolved in his favor. However, it did not set a legal precedent that could be used in future cases.

According to reports from a law firm, the government granted Jarrett’s refund request and instructed the IRS to schedule an overpayment before moving to dismiss the case.