Tokens that give voting rights in a decentralized organization, often distributed to contributors or users. Tokens received for contributions are compensation income; airdropped governance tokens are income at receipt; sales are capital transactions.
DAO contributors are frequently paid in the DAO's token with no 1099 and no withholding, which makes them self-employed for tax purposes. Voting itself is not a taxable event; receiving tokens is.
It can be, which would make members responsible for a share of its income. The law is unsettled and depends on structure; contributors should at minimum report what they receive.
Source: IRS Notice 2014-21; no DAO-specific guidance
Last reviewed September 17, 2026. Tax rules change; confirm current law before acting.
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