Short answer: Yes, Polymarket profits are taxable — federal only for Texans. But unlike Kalshi, Polymarket does not issue a 1099. You self-report USDC P&L at fair market value on each trade date. Schedule 1 of your 1040 is the most common reporting line.
Why there's no 1099
Polymarket runs through a Polygon-based USDC order book. The platform never holds your dollars — they live in your self-custodied wallet. There is no centralized account balance for the platform to issue a tax form against. The IRS still expects you to report the income; the lack of a form does not change your obligation.
How to self-report
- Export trades. Use Polymarket's "Export history" feature for a full CSV of fills.
- Pull wallet history. PolygonScan shows every USDC in/out. Most crypto-tax software imports it automatically.
- Run it through a tax tool. Koinly, CoinTracker, and TokenTax all handle Polymarket as a DEX/order-book trade — net P&L exports to Schedule 1.
- Report. Net winnings go on Schedule 1, Line 8z ("Other income"). Carry losses against gains within the same year.
Texas advantage
Texas has no state income tax. A $20,000 winning year on Polymarket costs a Texan federal tax only — same gross-to-net outcome as a Kalshi 1099 except you do the record-keeping yourself. 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.
Want the easier tax flow?
Kalshi issues a 1099-MISC or 1099-B at year-end — one number, you copy it onto your return. If you'd rather not keep your own books, that's a real reason to pick Kalshi as your primary venue. Kalshi taxes for Texans →
General information, not tax advice. Talk to a CPA, especially if you trade large size or hold over a year.
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