POLYMARKET TAXES FOR TEXANS
Texas charges no state income tax, so Polymarket profits are a federal-only question. Here's what to report — and what to keep.
Polymarket US · Deposit $10 get a $25 Trading Bonus!
TXPREDICTSClaim (opens in a new tab)21+ · T&Cs apply
18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading is risky. 100% loss can occur. See polymarket.com/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated exchange and clearing organization.
Short answer: Yes, Polymarket profits are taxable — federal only for Texans. Polymarket US is a CFTC-regulated app that trades in US dollars, so your records are simple dollar amounts. Check the tax documents in the app at year-end and report your net result; a CPA can confirm the right schedule.
TL;DR for Texans
- 🇺🇸 Federal income tax: yes
- 🤠 Texas state income tax: none
- 📄 Tax documents: check the Polymarket US app at year-end
- 📊 Records: your trade history and bank transfers, all in dollars
- 🧾 Unsure? Ask a CPA
Polymarket US · Deposit $10 get a $25 Trading Bonus!
TXPREDICTS
Claim on Polymarket US (opens in a new tab)
18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading is risky. 100% loss can occur. See polymarket.com/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated exchange and clearing organization.
Last checked October 21, 2026
What's actually settled (September 2026)
Profits from prediction markets such as Kalshi and Polymarket US are taxable, but the IRS has not yet issued guidance on how event contracts should be classified. Depending on the facts, tax professionals have argued they could be treated as gambling income, as ordinary income or capital gains, or, more aggressively, as Section 1256 contracts with 60/40 long/short-term treatment; none of these positions has been confirmed by the IRS. The classification matters: from 2026, gambling losses are deductible only up to 90% of losses. Platforms generally do not issue a single 1099 covering your trading profits. Kalshi, for example, issues 1099s for interest, rewards and crypto transfers and provides a profit-and-loss statement for your trades, so keep your own records. This is general information, not tax advice; consult a qualified tax professional.
What records to keep
Polymarket US holds your balance in a regular dollar account after full identity verification, so there are no crypto wallets or conversions to track. Whether or not you receive a form, the IRS expects you to report your net profit.
How to report
- Download your history. Export your trades and account activity from the Polymarket US app.
- Check for tax documents. Look in the app's tax or statements section at year-end.
- Total your net result. Add up gains and losses for the year; keep your bank deposit and withdrawal records.
- Report it. The right form depends on how event contracts are classified, which the IRS hasn't settled (see above), so decide with a tax professional.
Texas advantage
Texas has no state income tax. A $20,000 winning year on Polymarket costs a Texan federal tax only. A New Yorker pays federal plus 6.85% state, on top of NYC tax. This is why Texas (alongside Florida, Tennessee, Nevada) is one of the best US states to trade event contracts from.
How Kalshi compares
Kalshi provides a downloadable profit-and-loss statement for your trades (and 1099s for interest, rewards and crypto transfers), which makes record-keeping easy, but the classification question is the same. Kalshi taxes for Texans →
Polymarket
CFTC-regulated, trades in dollars. Deposit $10, get $25 with TXPREDICTS.
Kalshi
P&L statement for your trades · bank (ACH) funding · trade $25, get $25.
General information, not tax advice. Talk to a CPA, especially if you trade large size or hold over a year.
Sources & references
More: Polymarket fees · Is Polymarket 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 →
Kalshi
CFTC-regulated event contracts — trade $25, get $25
- CFTC-regulated (USA)
- Available in Texas
- Best for: Sports, weather, politics, economics
ProphetX
Your sports prediction market — trade $50, get $75
- CFTC-designated contract market
- 49 states + D.C. (not Nevada), including Texas
- Best for: Sports-only trading, no-vig peer-to-peer pricing
Polymarket
Largest prediction market — deposit $10, get a $25 trading bonus
- Polymarket Clearing (CFTC-regulated exchange)
- Available in Texas
- Best for: Deep liquidity, sports, politics & culture
OG (Crypto.com)
Sports event contracts on a CFTC-regulated DCM
- CFTC-regulated DCM (via Crypto.com Derivatives North America)
- Available in Texas
- Best for: Sports event contracts, mobile-first UX
Sources & references
Frequently asked questions
Do I pay taxes on Polymarket winnings in Texas?
Yes, federal income tax only: Texas has no state income tax. How event-contract profits are classified (gambling income, ordinary income or capital gains, or Section 1256) hasn't been settled by the IRS, so the right form depends on your situation. Ask a tax professional.
Does Polymarket send a 1099?
Check the tax documents section of the Polymarket US app at year-end. Whatever forms you receive, you are responsible for reporting net profits on your federal return. Keep your own trade history as a backup.
How do I track Polymarket trades for taxes?
Download your trade and account history from the Polymarket US app, keep your bank deposit and withdrawal records, and total your net profit and loss for the year. A CPA or tax software can take it from there.
Are Polymarket gains capital gains or ordinary income?
Nobody knows for certain yet. The IRS hasn't issued guidance on event contracts, and tax professionals disagree: some treat profits as gambling income, others as capital gains or ordinary income, and some argue Section 1256 (60/40) applies. Profits are taxable either way; keep your records and talk to a tax professional.
Do I need to deal with crypto for Polymarket taxes?
No. Polymarket US trades in US dollars, so there is no crypto conversion to track. You report the profit and loss on your event contracts like any other dollar-denominated trading.
21+ · T&Cs apply · Terms
18+ Only. Restrictions and eligibility requirements apply. Not available in all jurisdictions. Trading is risky. 100% loss can occur. See polymarket.com/tos for more information. The Polymarket US App serves as an independent software provider and affiliate of Polymarket US and Polymarket Clearing, the CFTC-regulated exchange and clearing organization.
