Kalshi taxes: 1099s, winnings, losses and how to file

Kalshi taxes at a glance

Do you have to pay taxes on Kalshi winnings?

Yes. If you are a US taxpayer, your Kalshi profit is income. A tax form does not create that income, so getting no form changes nothing. A small profit counts too: the $600 and $2,000 figures you may have seen decide when Kalshi sends a form for rewards, not what is taxable.

The IRS has issued no notice, ruling, regulation or form instruction on event contracts. That gap is why the same year of trades can be reported several ways.

Does Kalshi report your winnings to the IRS?

No. Kalshi’s Documents page says so in these words:

“Kalshi does not report profits/losses to the IRS (the 1099-MISC only contains credit/rewards from Kalshi).”

So the IRS has no automatic copy of your trading profit. You still owe the tax, and working out the number is your job. Kalshi’s Help Center says its P&L figures are not tax advice and that each member is responsible for the accuracy of their own return. How Kalshi calculates its P&L.

Does Kalshi send a 1099?

Not for trading profit, at any amount. These are the forms that can appear in your Documents tab after the year ends:

The $600 figure is the old 1099-MISC threshold for rewards, and it never applied to trading profit. More on the $600 myth. If you fund with crypto, account for the 1099-DA or 1099-B on your return so your numbers match the IRS’s copy.

Does Kalshi take taxes out of your winnings?

No. Kalshi withholds nothing from winnings or withdrawals, so the whole bill lands on your return. A big winning year can mean you owe estimated tax during the year, and the IRS can charge an underpayment penalty when too little was paid in. When you are taxed, and why nothing is withheld.

Do you owe tax if you don’t withdraw?

Yes. A gain or loss counts in the year the position closes or settles. Moving money to your bank is not a taxable event. Withdrawing $5,000 creates no tax, and leaving $5,000 of profit in your account saves you none. Interest, rewards and rebates count when they are credited.

How are Kalshi winnings taxed?

The IRS has not said, so traders use one of four treatments for their trading result. Pick one for all your event contracts in a year.

The main guide covers each treatment in depth, with both a winning and a losing year.

What is the tax rate on Kalshi winnings?

There is no special rate. Your profit is added to the rest of your income and taxed at your normal federal rate, from 10% to 37%. Section 1256 is the exception. These are the 2026 rates for a single filer:

The treatment changes the bill more than the table suggests. Take a year with $60,000 of winning days and $40,000 of losing days, a $20,000 net profit, in the 24% bracket:

This is simplified: one flat bracket and federal income tax only. The 3.8% net investment income tax can also apply to capital and Section 1256 gains once your modified adjusted gross income passes $200,000 ($250,000 married filing jointly). Full rate breakdown.

Are Kalshi winnings capital gains or gambling income?

Nobody with authority has decided. The contract looks like an investment you can sell before it settles, and also like a bet on an outcome. Which reading fits may depend on the contract: in October 2026 a Tax Law Center paper in Tax Notes Federal concluded that sports event contracts appear to be wagers for federal tax purposes. If your year was mostly sports, look at the gambling number before you rely on another treatment. Who argues what.

Does Section 1256 apply to Kalshi?

It is contested, and no IRS ruling or court has decided it. Section 1256 requires a contract on a qualified board or exchange. Kalshi is a CFTC-regulated exchange, so it meets that requirement, but the requirement alone is not enough.

• Against: Patrick Camuso and Sulolit Mukherjee (Tax Notes Federal, June 2026) conclude Section 1256 is not available under the current statute. Their reasons: the listed categories were built for price-based instruments, the contracts lack the daily mark-to-market of a regulated futures contract, and the CFTC calls them swaps, which triggers an exclusion in the statute.
• For: White & Case (March 2026) says that for a contract on a CFTC-regulated exchange, “the IRS will be hard pressed to treat the transaction as anything other than a ‘Section 1256 contract.’”
• Since then: in October 2026 the CFTC proposed adding event contracts to its definition of a swap, which made the argument harder, while saying tax treatment is for the IRS to determine.

Section 1256 usually gives the lowest bill in a winning year, which is why it deserves a second opinion. If you use it, ask a preparer about attaching a Form 8275 disclosure. Section 1256 explained.

Are Kalshi losses tax deductible?

Usually, but how much a loss is worth depends on the treatment.

A $10,000 net loss on $30,000 of winning days shows the gap. As capital gains, you deduct $3,000 this year and carry $7,000 forward. As gambling on the standard deduction, you deduct nothing and pay tax on the $30,000. Each path in detail. The gambling loss calculator runs the 90% rule on your own numbers. Selling at a loss and buying back within 30 days raises the wash sale question, which no IRS guidance answers for event contracts: wash sales on Kalshi.

Are Kalshi fees tax deductible?

Not as a separate deduction. Fees go into your cost when you buy and come off your proceeds when you sell, so they make gains smaller and losses larger. A tool that drops them overstates your profit.

Are Kalshi rewards, rebates and interest taxable?

Yes, and they are ordinary income whichever treatment you pick for your trades.

• Credits and rewards: liquidity rewards for resting orders, volume cashback, hedging rebates and referral credits. Below the 1099-MISC threshold you get no form, and the income is still taxable.
• Interest: Kalshi pays a variable rate on your cash balance, reported on a 1099-INT once it reaches $10.

Can you use the P&L number on Kalshi’s Documents page?

One net figure also cannot fill Form 8949, which needs each position. And Kalshi says its P&L data updates on the first of each month, so a mid-month figure can miss recent trades.

Which Kalshi file do you need for taxes?

• The realized P&L file (Documents tab). A ZIP with every closed position: entry price, exit price, fees, and the open and close times. Settlements and early sales are both in it. File from this one.
• The activity export (Your activity). Every individual fill, plus your deposits and credit rows. It is the only place your reward income is itemized, so download it too.

Upload both to WagerMints and it takes your trades from the realized file, checks them against the activity file, and pulls your credits out as a separate ordinary-income total.

How do you report Kalshi on your tax return?

1. Download both files above.
2. Match each sale to its purchase, with fees in your cost.
3. Price the year under each treatment and choose one, ideally with a preparer.
4. Enter the result on the matching form below.
5. Report rewards and interest separately.
6. Keep the export and your worksheet with your return.

Line by line, including the TurboTax screens.

Are Kalshi positions taxed if they are still open on December 31?

Under capital, ordinary and gambling treatment, no: a position is taxed when you close it or it settles. Under Section 1256, yes: it is “marked to market,” treated as sold at its December 31 price. If you plan to use Section 1256, note the year-end price of anything you hold before the year rolls over. WagerMints names every open position in your report instead of guessing a price for it. How the December 31 mark works.

Are Kalshi perpetual futures taxed the same way?

No, and their treatment is even less settled than event contracts. Whether they are futures or swaps is being fought out in federal court. Funding payments are ordinary income under every reading. WagerMints does not support perps yet, so leave them out of what you upload. More on perps and tax.

Do you owe state tax on Kalshi income?

Possibly. Your state may tax this income too, and its rules do not always follow the federal treatment you pick. The levies on prediction-market platforms in North Carolina, Kentucky and Illinois fall on the platform, not on you. Look up your state.

What records should you keep?

Keep both Kalshi files, your worksheet, any 1099s, and your year-end prices if you use Section 1256. With no trading form on file, those records are your answer if the IRS asks. If the IRS issues guidance later, you will also want them to re-run the year.

I trade prediction markets on Kalshi. I'm working on my US federal taxes for 2026.

From WagerMints, checked November 3, 2026:
- Kalshi's Documents page says it does not report profits and losses to the IRS.
- Forms it may send: 1099-INT for interest, 1099-MISC for credits and rewards, 1099-B or 1099-DA for crypto transfers.
- Its Profit and Loss statement uses first in, first out, is split by year and updates on the first morning of each month.
- Reward credits only appear in the activity export, not the trades export.
- The IRS has published no guidance on how event contracts are taxed.

Four ways traders report this:
1. Capital gains: Form 8949 and Schedule D, short- or long-term by holding period. Net losses offset up to $3,000 of other income a year, and the rest carries forward.
2. Section 1256: Form 6781, 60% long-term and 40% short-term however long I held. Positions open on December 31 count as sold at that day's value. Disputed: Camuso and Mukherjee (Tax Notes Federal, June 2026) conclude it isn't available, White & Case argues for it, and the CFTC's October 2026 proposal to call event contracts swaps cuts against it, because Section 1256 excludes swaps.
3. Ordinary income: net result on Schedule 1, line 8z.
4. Gambling: winnings on Schedule 1, line 8b. Losses only on Schedule A if I itemize, only up to winnings, and only 90% of them from 2026.

Read these pages:
- https://wagermints.com/kalshi-taxes
- https://wagermints.com/blog/how-kalshi-calculates-profit-and-loss
- https://wagermints.com/blog/how-to-report-kalshi-polymarket-taxes

My question: How would my year come out under each of the four methods?

How to answer:
- Say which links you opened, and never describe one you didn't open. If one fails, use the facts above and say so.
- Mark each point [linked source], [general tax rule] or [unsettled].
- Put the methods side by side in one table for my year, and state any number you assume.
- Don't pick a method for me. End with questions for a CPA or enrolled agent, then anything you need from me.

How do you work out your own Kalshi taxes?

Upload your Kalshi files to WagerMints and it prices the year under all four treatments, free and with no account, so you can see the dollar gap on your own trades. Pro ($39 per tax year) produces Form 8949, split by box, plus Schedule D and Form 6781 as PDFs. Try the Kalshi tax calculator.

General information about US federal tax, not tax advice. Your result depends on your whole return, so check it with a tax professional before you file.