Prediction-market taxes are confusing on purpose-built exchanges like Kalshi, unsettled treatment, no clean 1099, cents-based CSVs, and state tax on top. This is the whole picture in one place: how it works, the tools that do the math, and the fastest path from your trade history to IRS-ready forms. Not tax advice, but a straight explanation.
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Turn your CSV into IRS-ready forms →
Upload your Kalshi history and the Trade Report pairs trades, reconciles fees, converts cents to dollars, and outputs your 1256/8949 figures with a TurboTax export. Runs in your browser, nothing uploaded.
01
Gains are taxable, tracked per trade
Every closed Kalshi position is a taxable event. Your reportable figure is realized profit and loss across the year, paired trade by trade, not the cash sitting in your account.
02
The Section 1256 question
Because Kalshi is a CFTC-regulated exchange, there's a real argument its contracts qualify for Section 1256's 60/40 treatment, but it's unsettled. The alternative is ordinary income. It's a judgment call worth understanding.
03
No 1099 doesn't mean no tax
Kalshi gives you a transaction history, not always a tidy 1099-B. You're still responsible for reporting gains, which is why turning the raw CSV into correct figures matters.
04
State tax usually applies too
Beyond federal, most states tax your trading profit as ordinary income. A handful with no income tax don't. Your total bill is the two stacked together.
Common questions
How are Kalshi gains taxed?
Kalshi trading gains are taxable as investment income. There's an unsettled question of whether they qualify for Section 1256's favorable 60/40 treatment as regulated-exchange contracts, or are taxed as ordinary income. Either way, you report your realized profit and loss for the year.
Does Kalshi send a 1099?
Kalshi provides your transaction history, and may issue tax documents, but you shouldn't assume a tidy 1099-B will do all the work. You're responsible for reporting your gains, so having accurate per-trade figures from your history is what matters.
Do I owe state taxes on Kalshi profits?
In most states, yes, your trading profit is generally taxed as ordinary income at the state level in addition to federal tax. A few states with no individual income tax are the exception.
What's the fastest way to do my Kalshi taxes?
Export your transaction history CSV from Kalshi and run it through the Trade Report, which pairs your trades, reconciles fees, converts cents to dollars, and produces IRS-ready figures, including a Section 1256 estimate, in your browser.
ContractTax provides tools and general information, not tax advice. For your specific situation, consult a tax professional.