WagerMintsPrediction market tax calculator
Last reviewed November 6, 2026
Every position that made money this year.
Every position that lost money, as a positive number.
Net result: $10,000. Federal tax this year from this trading, at 24%:
Capital gains
$10,000 short-term gain at 24%.
$2,400
Ordinary income
$10,000 at 24%.
$2,400
Gambling
$30,000 winnings at 24%, losses count for nothing without itemizing.
$7,200
Section 1256 (60/40)lowest
60% at 15% and 40% at 24% on $10,000.
$1,860
The gap between the cheapest and the most expensive method is $5,340 of federal tax, for the same trades.
A rough estimate at one bracket rate, for this trading only. It leaves out the standard deduction effect, state tax and other income. Your own trades give the real numbers.
What the calculator assumes
- One tax bracket for this trading. A large win can push part of it into a higher bracket.
- Every position is short-term, which is true for almost every prediction market trade.
- Section 1256 only for CFTC-regulated exchanges such as Kalshi and Polymarket US.
- Gambling without the standard deduction effect. Claiming losses means giving up the standard deduction, which the gambling loss calculator shows.
- No state tax. Find your state’s rules.
Why does the calculator ask for winnings and losses separately?
Three of the methods only care about your net result. Gambling doesn’t: it taxes your winnings and treats losses as a separate deduction that only itemizers get. A trader who won $30,000 and lost $20,000 reports $30,000 of gambling income, not $10,000.
Example: same profit, different tax
Two traders each make $10,000 of profit in 2026, in the 24% bracket. One trades lightly, the other a lot:
| Method | Won $15,000, lost $5,000 | Won $60,000, lost $50,000 |
|---|---|---|
| Capital gains or ordinary income | $2,400 | $2,400 |
| Gambling, standard deduction | $3,600 | $14,400 |
| Gambling, itemizing | $2,520 | $3,600 |
| Section 1256 (Kalshi and Polymarket US only) | $1,860 | $1,860 |
The net methods charge both traders the same. Gambling charges the busier trader $10,800 more on the standard deduction. Even when itemizing, the busier trader pays $1,200 more than under the net methods, because 10% of its $50,000 of losses no longer counts. The 90% rule explained.
What are the four tax methods?
- Capital gains: net profit at your ordinary rate; a net loss deducts up to $3,000 a year and carries forward.
- Ordinary income: net profit at your ordinary rate; how a net loss works depends on your facts.
- Gambling: winnings taxed in full; losses only if you itemize, and only 90% of them from 2026.
- Section 1256: 60% taxed at the long-term rate, even for a one-day position; CFTC exchanges only.
More: how prediction market trades are taxed, the Kalshi and Polymarket versions of this calculator, and what a win or a loss is worth under each method.
Prediction market tax calculator questions
Are prediction market winnings taxable?
Yes. Profit from Kalshi, Polymarket and other prediction markets is taxable for US filers, whether or not the platform sends you a tax form.
How much tax do I pay on prediction market winnings?
It depends on which of four methods you report under and on your bracket. Capital gains and ordinary income tax your net profit at your ordinary rate. Gambling taxes your winning trades in full and only lets you deduct losses if you itemize. Section 1256 taxes 60% at the lower long-term rate, for CFTC-regulated exchanges only.
Why does the calculator ask for winnings and losses separately?
Because the gambling method taxes your winnings, not your net. Two traders with the same $10,000 profit can owe very different gambling tax if one of them traded much more.
Can I use the 60/40 rule for Polymarket?
Not for polymarket.com, which isn't a CFTC-regulated exchange. Polymarket US is, so trades made there can be argued under Section 1256 like Kalshi trades.
See your own year four ways
This is a rough estimate. Load your real Kalshi export or polymarket.com wallet into WagerMints for the exact numbers and filled forms. Free to run.
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