Anatoly Yakovenko, co-founder of Solana Labs, said that modifying how the Internal Revenue Service taxes staking rewards holds greater importance for the Solana ecosystem than adjustments to the network's burn mechanisms, transaction fees or inflation schedule.
The core issue stems from IRS Revenue Ruling 2023-14, which classifies staking rewards as ordinary income the moment a validator or delegator gains control over them. A tax obligation exists even if the tokens are not sold.
If a staker earns 100 SOL when the token trades at $150, they incur income tax on $15,000—even if they never liquidate the rewards. Tax professionals refer to this as phantom income, where a tax liability arises on unrealized gains. If SOL's price drops 40 percent after the rewards are received but before a sale, the staker still owes taxes based on the higher value at the time of receipt.
This burden disproportionately affects smaller stakers who often lack the liquidity to cover their tax obligations without selling a portion of their earned rewards. Such forced selling adds downward pressure on token prices and discourages participation in proof-of-stake networks.
In December 2025, Representative Mike Carey and 18 fellow members of Congress wrote to the IRS urging the agency to revise its guidance on staking and mining rewards before the 2026 tax year. The central reform proposal advocates treating staking rewards as newly created property, taxable only upon actual sale rather than at receipt.
The Solana Policy Institute has filed legal briefs supporting realization-based taxation on newly minted tokens.
Despite bipartisan Congressional interest and advocacy from industry groups, the IRS has maintained its stance from the 2023 ruling. No formal rulemaking process has been initiated to alter Revenue Ruling 2023-14.
Solana's governance approved SGP-0002 in late August 2026, doubling the network's disinflation rate to 30 percent and accelerating the reduction in new SOL issuance. Yakovenko positions these protocol-level adjustments as secondary to tax reform, arguing that improvements in network capacity and latency, combined with favorable tax treatment, would yield greater compounding effects than tokenomics tweaks alone.
He also signaled support for exploring burn mechanisms benefiting app developers, but characterized this as complementary, not primary for ecosystem growth.
Revenue Ruling 2023-14 affects every proof-of-stake network operating within the United States. Ethereum stakers, Cosmos delegators and participants across dozens of other networks face the same tax treatment with the 2026 tax year already underway.
