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

Polymarket taxes at a glance

The rest of this page covers polymarket.com unless it says otherwise. Jump to Polymarket US.

Do you have to pay taxes on Polymarket winnings?

Yes, if you are a US taxpayer. Your profit is income whether or not a form arrives, and crypto settlement does not change that. The IRS has issued no guidance on how to classify these contracts, so the open question is which treatment applies.

polymarket.com settled with the CFTC in 2022 and blocked US users. Those facts do not remove tax on income a US taxpayer earned there.

Does Polymarket report to the IRS?

polymarket.com sends no tax forms, so the IRS gets no form about your trades from it. You still owe the tax. Your trades are also public on the blockchain under your wallet address, so treat them as a permanent record.

Does Polymarket send a 1099?

No. polymarket.com does not issue a 1099-B, 1099-DA or W-2G for your trades, and there is no year-end statement. If an exchange such as Coinbase reports the crypto you moved to or from your wallet, that form covers the crypto, not your Polymarket trading.

Does Polymarket take taxes out?

No. Nothing is withheld on 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.

Do you owe tax on Polymarket if you don’t withdraw?

Yes. A gain or loss counts when you sell a position or its market resolves. Leaving the money in your wallet does not delay the tax. Cashing out to dollars later can add a tiny crypto gain or loss on top, usually cents.

What counts as a taxable event on Polymarket?

How are Polymarket winnings taxed?

The IRS has not said, so traders use one of three treatments for polymarket.com trades. 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 Polymarket winnings?

There is no special rate. Your profit is added to your other income and taxed at your normal federal rate, from 10% to 37%. The 2026 brackets are here. Positions held more than a year could get long-term rates under capital treatment, but few prediction-market positions last that long.

The treatment changes the bill more than the rate does. 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 gains once your modified adjusted gross income passes $200,000 ($250,000 married filing jointly).

Are Polymarket winnings capital gains or gambling income?

Nobody with authority has decided. Your position is a token you can sell before the market resolves, which looks like a capital asset. It also pays on the outcome of an event, which looks like a bet. In October 2026 a Tax Law Center paper in Tax Notes Federal concluded that sports event contracts appear to be wagers, so look at the gambling number if your year was mostly sports. Who argues what.

Does Section 1256 apply to Polymarket?

Not to trades on polymarket.com. Section 1256 only covers contracts traded on a qualified board or exchange, such as a CFTC-designated contract market, and polymarket.com has never been one for US traders. So the 60/40 treatment fails at the first step for wallet trades. A tool that offers it for a polymarket.com wallet without a warning is getting that step wrong. Section 1256 explained.

Are Polymarket losses tax deductible?

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

A market that resolves against you is a loss even though you never clicked sell. Each path in detail. If your funds were stolen rather than lost on a trade, the rules are different: hacks and theft losses. 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 Polymarket.

Are Polymarket liquidity rewards taxable?

Yes. Polymarket pays liquidity rewards, maker and taker rebates and, on some balances, yield. All of it is ordinary income, separate from your trading result, whichever treatment you choose.

Is buying a Polymarket position with a stablecoin taxable?

Strictly, yes. Trading on Polymarket uses a dollar-pegged token: USDC historically, and now pUSD, which Polymarket’s documentation describes as backed by USDC. Spending one is a disposal of a digital asset. Because it is pegged to the dollar, the gain or loss is usually close to zero but not definitionally zero, and a crypto tax tool may list each one. It rarely changes your bill. It does make the paperwork longer.

How do you get your Polymarket tax history?

From your wallet. polymarket.com gives you no tax document, and your record is your wallet’s public history. WagerMints reads it from your wallet address: every buy, sale, redemption and reward, matched and priced. No login, no key, nothing you could not already see on a block explorer.

How do you report Polymarket on your tax return?

1. Pull your full history from your wallet address.
2. Match each sale or resolution 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, rebates and yield separately as ordinary income.
6. Keep your history and worksheet with your return.

If you also trade on Kalshi, report both together. You file one return, so the results combine under whichever treatment you choose. Line by line, including the TurboTax screens.

How is Polymarket US taxed?

The same way as Kalshi. Polymarket US is run by a different company on a CFTC-regulated exchange, so all four treatments are on the table, Section 1256 included, with the same caveats. Its trades go in boxes C and F. The Kalshi guide covers the rules. The exchange does not change the treatment of trades you made earlier on polymarket.com.

Polymarket US has no trade export we have found, and its API keys have no read-only option yet, so WagerMints does not support it today.

Do you owe state tax on Polymarket income?

Possibly. Your state may tax this income too, and its rules do not always follow the federal treatment you pick. Look up your state.

What if you are not a US taxpayer?

Everything above is US federal tax. Rules elsewhere differ, and several countries do not tax casual betting wins at all. See our country notes, and check with a local adviser.

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

From WagerMints, checked November 3, 2026:
- polymarket.com sends no tax forms, so the IRS gets no form about my trades from it. The tax is still owed.
- Trades are on a public blockchain, so a wallet address can rebuild the history.
- Crypto moved in and out can be a separate taxable event.
- 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. Not available on polymarket.com: it needs a qualified board or exchange, such as a CFTC-designated contract market, and polymarket.com isn't one.
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/polymarket-taxes
- 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 Polymarket taxes?

Enter your polymarket.com wallet address in WagerMints and it prices the year under each treatment, 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 as PDFs. Check your wallet. For a rough figure from your totals first, use the Polymarket 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.