Kalshi taxes: the honest version, including the gray areas

Data: official Kalshi settlements

Last updated: October 2026. Educational information about how US traders generally handle event-contract taxes — not tax advice. Event-contract tax treatment is an unsettled area; confirm your situation with a qualified tax professional.

Interest in "Kalshi taxes" spikes every filing season for one reason: people win money, then discover the paperwork doesn't work like a sportsbook's or a brokerage's. Here is the situation as it stands, with the disagreements left visible instead of smoothed over.

The parts that are settled

• Winnings are taxable. A contract that settles in your favor, or a position you sell at a profit, is a taxable event when it happens — moving the money to your bank is irrelevant.
• Losses matter too. Losing contracts are part of your net result under whichever classification method you use; keep them, don't cherry-pick.
• Worldwide income counts. US taxpayers owe tax on gains from offshore platforms (like Polymarket's global site) even though those platforms send no US forms at all.
• States differ. Your state may tax this income its own way; federal treatment is only half the filing.

What Kalshi reports — and what it doesn't

Kalshi issues 1099-series forms for items like interest on cash balances (1099-INT) and rewards and credits (1099-MISC), and it gives you a profit-and-loss statement and a full trade history export. What traders consistently find — and CPAs who work this niche confirm — is that no Kalshi form comprehensively reports your contract trading gains and losses the way a brokerage 1099-B reports stock trades. The practical consequence: your trading result is yours to compute, from your own exported history, and the absence of a form never removes the obligation to report it.

The genuinely unsettled question: how are gains classified?

The IRS has issued no guidance specific to event contracts, so three frameworks circulate among traders and tax professionals:

• Section 1256 (60/40): Kalshi is a CFTC-regulated contract market, the kind of venue whose contracts can qualify for 60% long-term / 40% short-term treatment. Many traders take this position; it has not been definitively confirmed for event contracts.
• Capital gains: treating contracts like investment positions reported on Schedule D.
• Ordinary income: the most conservative reading, reporting net earnings as other income.

Each changes your bill materially, and the 2026 change capping gambling loss deductions at 90% adds a further question — whether it even applies to exchange-traded event contracts treated as trading. Anyone who tells you this is all settled is selling something. Choose a framework with a CPA who knows this niche, apply it consistently year to year, and keep records that would let you defend it.

The record-keeping habit that saves you

Export your full Kalshi trade history and P&L statement at year-end (and keep monthly snapshots if you trade heavily). Cost basis is what you paid for contracts — not what you deposited. If you trade the 15-minute markets through platforms like Robinhood as well, expect separate statements from each and reconcile them against your own log before filing.

This page summarizes public information and common professional practice as of October 2026; tax law and platform reporting change. It is not a substitute for a CPA. And a record note: our own signals site handles no money and executes no trades — your tax life happens entirely on the platforms where you trade.

Short answers

Do you pay taxes on Kalshi winnings?

Yes. Profits from event contracts are taxable income in the US, realized when a contract settles or you sell at a profit — whether or not you withdraw the money. The open question is not whether they're taxed, but how they're classified.

Does Kalshi send a 1099 for trading profits?

Don't count on a form that reports your trading profit. Kalshi issues 1099-series forms for things like interest (1099-INT) and rewards or credits (1099-MISC), and provides a profit-and-loss statement — but traders are responsible for computing and reporting their contract trading results from their own records. Absence of a form does not remove the obligation.

How are Kalshi gains classified — ordinary, capital, or Section 1256?

Genuinely unsettled. The IRS has not issued event-contract-specific guidance. Because Kalshi is a regulated futures-style exchange, many traders and tax pros discuss Section 1256 (60/40) treatment; others report as capital gains or ordinary income. Pick a method with a qualified CPA, apply it consistently, and keep complete records.

Educational content only — not financial advice. Prediction markets can lose you money: every contract that settles against you is worth $0. Adults 18+ only.