Staking, Mining & Airdrops: When Crypto Income Is Taxed

Short answer: Staking, mining and airdrop rewards are taxed twice, in two layers – and both are correct. First, the dollar value of rewards when you gain dominion and control is ordinary income: the IRS confirmed this for staking in Revenue Ruling 2023-14. Second, that value becomes your cost basis, so selling later for more creates a capital gain, and selling for less a capital loss. Record the value on the day of receipt.

The IRS taxes crypto you earn twice, in two different ways – and both are correct.

When are staking, mining and airdrop rewards taxed as income?

Layer 1 – income: when you gain control of mining rewards, staking rewards, or a taxable airdrop, the dollar value at that moment is ordinary income. Mining as a business also means Schedule C and possibly self-employment tax; hobby mining is reported as other income.

What happens when you sell the rewards later?

Layer 2 – capital gains: that income value becomes your cost basis. Sell later for more and you have a capital gain; sell for less, a capital loss. This is why recording the value on the day of receipt is essential – no record, no basis, and the IRS can treat the full sale price as gain. Whether the gain is short- or long-term depends on how long you held the coins.

What is still unclear about airdrops and hard forks?

Gray areas to know: the IRS ruled in Rev. Rul. 2023-14 that staking rewards are income when the taxpayer gains dominion and control. Unsolicited airdrops you never claimed, and hard-fork coins you cannot access, are debated – document your position and get advice for material amounts. Liquidity-pool and lending rewards follow the same income-then-basis pattern in most analyses; see our DeFi taxes guide.

Frequently asked questions

How is staking taxed in the US?

Staking rewards are ordinary income at their dollar value when you gain dominion and control of them, as confirmed in Rev. Rul. 2023-14. That value becomes your cost basis, so selling later for more is a capital gain and selling for less is a capital loss.

Is mining income self-employment income?

Mining rewards are ordinary income when you gain control of them. Mining as a business also means reporting on Schedule C and possibly paying self-employment tax; hobby mining is reported as other income.

Are airdrops always taxable?

Not always. A taxable airdrop is ordinary income at its dollar value when you gain control of it. Unsolicited airdrops you never claimed, and hard-fork coins you cannot access, are debated – document your position and get advice for material amounts.

Related guides

• DeFi Taxes: Swaps, Liquidity Pools, Lending & Wrapped Tokens
• How to Report Crypto on Your Taxes: Form 8949 & Schedule D, Step by Step
• How Crypto Is Taxed in the US: The Complete 2026 Beginner’s Guide

Sources

• IRS Rev. Rul. 2023-14 – staking rewards are income when the taxpayer gains dominion and control.
• IRS Rev. Rul. 2019-24 – forks and airdrops.
• IRS Notice 2014-21 – virtual currency is property.
• IRS Digital Assets – IRS guidance hub.

This guide is general education only – not tax, legal or financial advice. Verify with the source authority and a qualified tax professional before filing.