KALSHI TAXES FOR TEXANS

On this page · 6

1. Why the classification matters
2. What Kalshi sends you
3. Texas vs other states
4. What about Polymarket?
5. Pick the easier paperwork
6. Pick your venue

Short answer: Yes, Kalshi profits are taxable, and for Texans only at the federal level, because Texas has no state income tax. How they're classified is not settled: the IRS has issued no guidance on event contracts, so keep Kalshi's profit-and-loss statement and your own records, and report your profits even if you don't receive a 1099 for them.

Why the classification matters

If event-contract profits are treated as gambling income, losses are only deductible as an itemized deduction, and from tax year 2026 only up to 90% of your losses, so even a trader who breaks even could owe tax. Treated as ordinary income or capital gains, gains and losses net differently, and Section 1256 treatment (argued by some professionals, doubted by others) would apply a 60% long-term / 40% short-term split. Because the IRS hasn't ruled, the right choice depends on your facts, which is why a tax professional is worth it if you trade meaningful size.

What Kalshi sends you

Kalshi's help center lists a 1099-INT for interest, a 1099-MISC for credits and rewards, a 1099-B for crypto transfers and a 1099-DA for digital assets. For event-contract trading itself it provides a downloadable profit-and-loss statement, not a 1099-B. Use that statement, plus your own trade history, when you or your preparer file.

Texas vs other states

Texans get an unusual win here. A New Yorker netting $10,000 on Kalshi pays federal tax PLUS roughly 6.85% NY state tax PLUS NYC tax. A Texan with the same profits pays only federal — saving thousands at higher income levels. It's one of several reasons Texas is one of the best US states to trade event contracts from.

What about Polymarket?

Polymarket US is also CFTC-regulated and trades in dollars. Check the tax documents in its app at year-end, keep your own trade history, and report net profits federally — the same basic approach as Kalshi. Polymarket legality in Texas →

Pick the easier paperwork

This is general information, not tax advice. Talk to a CPA about your specific situation, especially if you trade large size or have business income.

More: Kalshi fees explained · Is Kalshi legal in Texas? · All guides →

Pick your venue

Four CFTC-regulated exchanges that accept Texans (status in Texas: Available, as of 3 October 2026). Full comparison →

Frequently asked questions

Do I pay taxes on Kalshi winnings in Texas?

Yes, at the federal level only: Texas has no state income tax. How the profits are classified isn't settled. The IRS has issued no guidance on event contracts, and tax professionals variously treat them as gambling income, ordinary income or capital gains, or (more aggressively) Section 1256 contracts. Report your profits and ask a tax professional.

Does Kalshi send a 1099?

Kalshi issues a 1099-INT for interest, a 1099-MISC for credits and rewards, a 1099-B for crypto transfers and a 1099-DA for digital assets. For event-contract trading it provides a downloadable profit-and-loss statement rather than a 1099-B, so use that and your own records when you file.

Can I deduct Kalshi losses?

It depends on how the contracts are classified, which the IRS hasn't decided. If they're treated as gambling income, losses are deductible only as an itemized deduction and, from tax year 2026, only up to 90% of losses. Other treatments net gains and losses differently. Consult a tax professional.

How does Polymarket compare for taxes?

Polymarket US is a CFTC-regulated US app that trades in dollars. Check the tax documents it provides in the app at year-end, keep your own trade history, and report net profits federally. Texas has no state income tax. Consult a CPA for your situation.

What records should I keep?

Download your Kalshi trade history CSV at year-end. Keep deposit and withdrawal records from your bank. If you also trade on Polymarket, download your trade history from the Polymarket US app.