Kalshi Tax Guide: How Prediction Market Profits Are Taxed

How Kalshi Profits Are Taxed

Kalshi profits are treated as Section 1256 contracts, similar to regulated futures.

Tax Treatment

60/40 Rule

Regardless of holding period:

• •60% taxed at long-term capital gains rate
• •40% taxed at short-term (ordinary income) rate

This is favorable compared to stocks held less than a year!

Example Tax Calculation

$10,000 profit with 35% income tax bracket:

• •60% × $10,000 × 15% = $900
• •40% × $10,000 × 35% = $1,400
• •**Total tax**: $2,300 (23% effective rate)

vs. stocks held short-term: $3,500 (35%)

Tax Forms

Kalshi provides:

• •**1099-B**: Reports your transactions
• •**Year-end summary**: For easy filing

Deducting Losses

Losses can offset gains and up to $3,000 of ordinary income per year. Unused losses carry forward.

Consult a Professional

This is general information. Consult a tax professional for your specific situation.