H.R. 9175 faces criticism over proposed five-year tax cap on staking and mining rewards

H.R. 9175, the Tax Clarity for Mining and Staking Act, was introduced on June 8 by Representative Mike Carey to let miners and stakers defer taxes on their rewards until they actually sell. Representative Steven Horsford has proposed an amendment that would cap that deferral at five years, forcing validators to pay up on a government-imposed timeline regardless of whether they’ve touched their tokens.

What the bill actually does

Under current IRS guidance dating back to 2014, and reinforced in 2023, anyone who earns digital assets through mining or staking owes income tax the moment those tokens hit their wallet. Not when they sell. Not when they convert to dollars. The moment they receive them.

H.R. 9175 would classify newly minted digital assets received as rewards as ordinary income but give taxpayers the option to treat them like self-created property. That means they could defer tax recognition until the asset is actually sold or disposed of. The bill also includes a provision ensuring that grantor trusts holding digital assets can receive staking rewards without jeopardizing their grantor trust status.

The five-year cap and why it’s controversial

Representative Horsford’s proposed amendment would impose a five-year limit on the deferral election. After five years, validators would be required to recognize the income regardless of whether they’ve sold their tokens.

The Blockchain Association and the Crypto Council for Innovation sent a joint letter to the House Ways and Means Committee on June 21, urging passage of the bill without amendments. Their core argument: the deferral election as originally written properly accounts for market liquidity conditions and the practical realities validators face.

Where the bill stands now

H.R. 9175 is currently under consideration by the House Ways and Means Committee, with no markup scheduled as of June 23. That means it hasn’t yet been formally debated, amended, or voted on at the committee level.

The IRS first issued guidance on cryptocurrency taxation in 2014 via IRS Notice 2014-21, treating all mined cryptocurrency as immediately taxable income. The agency reinforced this approach in 2023 with Revenue Ruling 2023-14, which confirmed staking rewards are taxable upon receipt.

What this means for investors and validators

If H.R. 9175 passes in its original form, stakers and miners could defer income recognition until disposition, compounding rewards without triggering tax liabilities along the way. For institutional players, the grantor trust provision opens the door for more sophisticated fund structures to participate in staking without creating tax complications for wealth managers and family offices.

The Horsford amendment, if adopted, would create a ticking clock that forces validators into tax planning around an artificial deadline rather than their actual investment strategy. For long-term stakers on networks with extended lockup periods, this could mean paying taxes on assets they cannot access.

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