Do You Pay Tax When You Unstake Crypto in the US?

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Short answer: usually no — but unstaking can still hand you a tax bill

Do you pay tax when you unstake crypto in the US? In the common case, no. If you staked 10 ETH, then unstake and get the same 10 ETH back in your own wallet, you have not sold anything. The IRS taxes disposals and income, not moving your own coins from one state to another. So the unstake itself is generally not a taxable event.

That short answer comes with three traps, and they are where people get caught. First, rewards that were locked until you unstaked may become taxable income at the moment you can finally use them. Second, liquid staking tokens change the picture: swapping a token like stETH back for ETH may count as a 

disposal, and the IRS has never ruled on it either way. Third, selling straight after unstaking is a separate taxable sale, even though the unstake was not. This guide separates those four moments so you can see which one actually creates tax.

Last updated: 4 November 2026

The rule that decides everything: no disposal, no capital gains tax

The IRS treats cryptocurrency as property. Under that treatment, capital gains tax applies when you dispose of property — sell it, swap it for different property, or spend it. Simply holding property, moving it between wallets you own, or changing its state without giving it up is not a disposal.

Plain unstaking fits that pattern. You locked coins you already owned, the network held them while you staked, and then it returned the same coins to you. Ownership never changed hands. Nothing was received in return except your own property back. That is why tax guides and practitioners treat a plain unstake the same way they treat a wallet-to-wallet transfer: not taxable on its own.

One honesty note matters here. The IRS has not published a ruling that says the words "unstaking is not taxable." The position follows from the general disposal rule in Notice 2014-21, not from a dedicated unstaking ruling. That distinction matters for the liquid staking section below, where the same general rule points in two directions and practitioners disagree.

Four unstaking moments, four different tax answers

What happens at unstaking	Taxable?	Why
Plain unstake: same coins back to your wallet	Generally no	No disposal, no new income — your own property returned
Locked rewards become usable at unstaking	Yes, as ordinary income	Rewards are income when you gain dominion and control (Rev. Rul. 2023-14)
Liquid staking token redeemed (for example stETH back to ETH)	Unsettled — treat with care	No IRS ruling; some treat the swap as a disposal, others as a receipt token
You sell the unstaked coins straight away	Yes, capital gain or loss	The sale is a disposal, measured against your original basis

Worked example 1: plain unstake, no sale (example figures)

EXAMPLE: You bought 10 ETH for $20,000 in total ($2,000 each) and staked them. Over a year you earned 0.5 ETH in rewards, which you reported as income as they became available (see the next section for why the timing matters). You then unstake and receive your original 10 ETH back.

Tax result: the return of the 10 ETH itself creates no tax. Your cost basis in those 10 ETH stays $20,000, and your holding period keeps running from the original purchase — staking did not reset it. If you later sell those 10 ETH for $30,000, the gain is $10,000 ($30,000 minus $20,000). Whether that gain is short-term or long-term depends on how long you held them in total, counting from purchase, not from unstaking.

Worked example 2: the locked-rewards trap (example figures)

EXAMPLE: You staked 5 SOL and earned rewards that the protocol locked — you could not sell, transfer, or spend them while staked. At unstaking, 0.4 SOL of rewards finally becomes usable, when SOL trades at $150. That is $60 of value.

Tax result: under Revenue Ruling 2023-14, staking rewards are ordinary income in the year you gain dominion and control over them — the moment you can sell, exchange, or otherwise dispose of them. If unstaking is the first moment you can actually use those rewards, unstaking is the moment the income arises, even though you sold nothing. The $60 goes on your return as ordinary income, and $60 becomes the cost basis of those 0.4 SOL for any later sale. If you later sell them for $80, only the $20 growth is a capital gain.

The mirror image also matters. Rewards you could already withdraw while still staked were taxable when they became withdrawable, not at unstaking. Unstaking does not move that income into a later year. And a freeze after you already controlled rewards does not erase the income: IRS Chief Counsel Advice has drawn the line at credited-before-freeze (taxable) versus accrued-but-never-credited (not yet income). If a platform froze your account after you had already received rewards, the income from before the freeze stands.

The liquid staking exception: stETH and the grey area

Liquid staking works differently from plain staking. When you stake ETH through a protocol such as Lido, you receive a different token — stETH — in return. When you unstake, you hand stETH back and receive ETH. That round trip looks like a crypto-to-crypto swap, and swaps are disposals under the IRS property rules.

Here the honest answer is that nobody knows for certain, because the IRS has not ruled on it. Two practitioner views exist:

• View A — it is a disposal. You gave up one property (stETH) and received different property (ETH). Under the conservative reading, both the mint and the redemption are disposals, each measured against basis.
• View B — it is not a disposal. The staking token is only a receipt or claim on your original deposit, not a genuinely different asset. On this view, nothing is disposed of until you actually sell.

EXAMPLE (conservative view): You deposited ETH worth $1,500 and received stETH. Later you redeem the stETH for ETH worth $1,700. Under View A, that redemption produces a $200 capital gain ($1,700 minus $1,500 basis). Under View B, it produces nothing until you sell the ETH.

Whichever view you take, take it consistently on the way in and the way out. Reporting the mint as non-taxable and the redemption as a disposal, or the reverse, is the combination most likely to draw questions. If the amounts are large, this is the one unstaking question worth taking to a tax professional before you file, because a future IRS ruling could settle it either way.

Unbonding periods do not change the tax logic

Many networks make you wait after unstaking — an unbonding period — before the coins land in your wallet. That wait is a network mechanic, not a tax rule. It does not create tax by itself, and it does not erase tax either.

What the wait can affect is timing for locked rewards. If rewards are genuinely unusable during unbonding — you cannot sell, transfer, or spend them — there is a reasonable argument that dominion and control has not yet arrived. If they become usable only when unbonding ends, that is when the income likely arises. The IRS has not ruled on this exact edge, so keep records of when rewards actually became usable rather than assuming the unstake request date controls.

Three smaller tax moments people miss

1. Paying the unstaking fee in crypto. If the network or transaction fee is paid in crypto, that fee payment is itself a disposal of a small amount of crypto. The gain or loss on the fee portion is usually tiny, but it is still reportable. A fee paid in dollars has no such effect.

2. Rewards auto-compounded while staked. Rewards that were credited to an account you could withdraw from were income when credited, even if you left them staked and never withdrew. "I never touched it" is not a defence against income that was already under your control. The Tax Court backed the receipt-timing rule for staking rewards in Paschall v. Commissioner (T.C. Memo. 2026-46), a case about exchange-credited rewards — it is a rewards case, not an unstaking ruling, but it confirms the direction of travel.

3. Slashing or lost coins. If some of your stake was slashed (penalised by the network) and never returned, that is a loss of property, not a sale. Whether and how you can claim it depends on your overall position and the type of loss — keep the protocol records, and do not assume it automatically offsets other gains.

What to report, and where

• Staking rewards as income: report the dollar value at the moment you gained dominion and control as other income on Schedule 1 of Form 1040. That value becomes the basis of the reward coins.
• Any disposal (sale, swap, fee paid in crypto, or a conservative-view LST redemption): report the gain or loss on Form 8949, carried to Schedule D. Short-term rates (held one year or less) follow ordinary income brackets, 10% to 37%. Long-term rates are 0%, 15%, or 20%.
• The digital asset question: receiving staking rewards or disposing of crypto means answering "Yes" to the digital asset question on Form 1040. A plain unstake with no rewards and no sale does not by itself force a "Yes" — but most stakers will have received rewards, so most will answer "Yes" anyway.
• No 1099-DA does not mean no tax. Notice 2024-57 temporarily kept staking transactions out of the broker reporting on Form 1099-DA while the IRS studies them. A missing form is a reporting gap, not an exemption. The income is still reportable.

Record checklist for unstaking day

Keep these five records for every unstake, because exchanges and protocols do not always keep them for you:

1. The date and time you requested the unstake, and the date the coins actually became usable (these can differ during unbonding).
2. How many coins came back as principal, and how many as rewards, separately.
3. The dollar price of each reward batch at the moment it became usable — that price is your income figure and your later basis.
4. Any fee paid, in what coin, and its dollar value at the time.
5. For liquid staking, the mint and redemption amounts and prices, and which view (disposal or receipt token) you applied — consistently.

FAQ

Do you pay tax when you unstake crypto if you do not sell?

Usually no on the principal — getting your own coins back is not a sale. The exception is locked rewards that become usable at unstaking: those are ordinary income at that moment under Revenue Ruling 2023-14.

Is unstaking the same as selling for tax purposes?

No. Selling gives up the coins for dollars or other property and is a disposal. Plain unstaking returns the same coins to you. The two are only confused when unstaking is immediately followed by a sale — then the sale, not the unstake, is the taxable event.

Does unstaking reset my holding period?

No, for the principal. Because plain unstaking is not a disposal, the holding period keeps running from the original purchase. Reward coins get their own holding period starting when you gained control of them.

What if I unstake through an exchange?

The same logic applies. Revenue Ruling 2023-14 states the result is the same whether you stake directly or through an exchange. What changes is record-keeping: the exchange may report some transactions on a 1099-DA, but staking rewards are temporarily excluded from that reporting, so do not rely on the form alone.

Should I report a stETH redemption as a swap?

The IRS has not ruled on it. The conservative approach treats it as a disposal; the receipt-token view treats it as non-taxable until sale. Pick one view, apply it both ways, keep the records, and get professional advice if the amounts are large.

Sources

• IRS Revenue Ruling 2023-14 — staking rewards as income when the taxpayer gains dominion and control
• IRS Notice 2014-21 — virtual currency treated as property; disposal rules
• IRS Digital Assets — official FAQ, forms and reporting guidance
• IRS Form 1040 instructions — Schedule 1 other income and the digital asset question
• IRS Notice 2024-57 — temporary exclusion of staking and similar transactions from 1099-DA broker reporting

Related guides: Do You Pay Tax on Crypto Staking Rewards in the US? · How to Unstake Crypto: Unbonding Periods Explained · Is a Crypto-to-Crypto Swap Taxable in the US?

Adrian Cole writes beginner guides on crypto taxes and staking. This article is educational only and is not financial or tax advice. Tax rules change, and individual circumstances differ — check the IRS sources above or speak to a qualified tax professional before filing.