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• Solana staking rewards are taxed as ordinary income when received.
  
• Selling rewards can trigger capital gains tax based on price changes.
  
• Accurate tracking is essential, especially for frequent rewards.

Staking Solana has become a popular way for investors to earn passive income. But while rewards can add up quickly, many stakers are surprised to learn that those earnings also come with tax obligations. In the United States, Solana staking rewards are generally treated as taxable income, and a second layer of tax can apply when those rewards are sold. Understanding how and when taxes apply is essential for staying compliant and avoiding unpleasant surprises.

Here’s a clear breakdown of how Solana staking is currently taxed, what triggers a taxable event, and how to report it.

How Solana Staking Rewards Are Taxed

When you receive staking rewards, the IRS treats them as ordinary income. The value of the SOL at the moment you gain control over the rewards becomes taxable, even if you never sell or withdraw them.

For example, if you earn 5 SOL while the token is priced at $100, you must report $500 in income. That amount is taxed at your marginal income tax rate, which can range from 10% to 37%, depending on your overall income.

Later, if you sell those 5 SOL for $150 each, you also owe capital gains tax on the price increase. In this case, the $50 per token difference is taxed as a capital gain.

This structure means you are not taxed twice on the same value. You’re taxed once on receipt, and again only on the price change after receipt.

What Triggers a Taxable Event?

Staking and un-staking SOL alone are not taxable. The key moment is when rewards become available for you to withdraw, trade, or transfer.

The IRS uses the concept of “dominion and control” to define this point. Because Solana allows users to access rewards as soon as they’re credited, it’s generally assumed that taxable income occurs immediately upon reward distribution.

Even small amounts matter. Whether you earned $20 or $20,000 in staking rewards, all of it must be reported.

Short-Term vs. Long-Term Capital Gains

When you dispose of staking rewards:

• Rewards held less than one year are taxed at short-term capital gains rates (the same as income tax rates).
• Rewards held longer than one year qualify for long-term capital gains rates, which range from 0% to 20%.

Tracking when each reward was received is crucial for determining which rate applies.

Liquid staking tokens such as mSOL or jitoSOL introduce uncertainty because the IRS has not issued specific guidance.

Many tax professionals recommend a conservative approach: treat the increase in redeemable SOL as taxable income as it accrues. A more aggressive approach delays reporting until tokens are redeemed. Most investors lean toward the conservative method to reduce audit risk.

Where to Report Solana Staking Taxes

• Report staking income as “Other Income” on Schedule 1 of Form 1040.
• Report capital gains and losses on Form 8949 and Schedule D.

Because rewards can arrive frequently, crypto tax software is often used to automate tracking and calculations.

Also Read: Solana Prints $110B DEX Volume as XRP Struggles to Break $2.15

Lawmakers have proposed bills that would delay taxation until rewards are sold. However, as of late 2025, no such legislation has passed. For now, staking rewards remain taxable when received.

Solana staking can be profitable, but it also creates ongoing tax responsibilities. Rewards are taxed as income when you gain access to them, and any price change afterward is subject to capital gains tax. Careful recordkeeping—or reliable crypto tax software—can make the difference between a smooth filing season and a stressful one.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.