Kalshi Taxes 2026: Everything You Need to Know About How To File
SEO title: Kalshi Taxes 2026: 1099s, Tax Forms & Section 1256
Meta description: Kalshi profits are taxable, but how are they reported? Learn about Kalshi 1099s, P&L statements, Section 1256, the 60/40 rule, event contracts, and perpetual futures.
Kalshi Taxes 2026: 1099s, Tax Forms & Section 1256
If you make money trading on Kalshi, your profits are taxable. The more complicated question is how those profits should be taxed.
Kalshi is different from most prediction markets because it operates as a CFTC-regulated Designated Contract Market (DCM). That makes Section 1256 — the tax regime that gives qualifying futures and options 60/40 capital gains treatment — much more relevant to Kalshi than to offshore or crypto-based prediction markets.
But Kalshi now offers two importantly different types of products:
Event contracts, which the CFTC generally lists as binary-option swaps.
Perpetual futures, which the CFTC explicitly classifies as futures contracts.
That distinction matters. Section 1256 may be a supportable treatment for some Kalshi contracts, but Kalshi's regulated status alone does not automatically mean every trade qualifies for the 60/40 rule.
Kalshi's tax documentation has also evolved. Rather than issuing a 1099 that simply reports all of your event-contract trading profits, Kalshi provides users with a downloadable profit and loss statement, while specific 1099 forms are used for things such as interest, rewards, crypto transfers, and digital-asset transactions.
Here's what US Kalshi traders need to know.
Are Kalshi winnings taxable?
Yes.
Profits from Kalshi are taxable even if you do not receive a tax form specifically reporting your trading P&L.
The real issue is how the activity is characterized.
Depending on the product and the tax position being taken, possible treatments include:
Section 1256 treatment
Capital gain or loss treatment
Wagering treatment
The IRS has not issued guidance specifically establishing one tax treatment for all prediction-market event contracts.
That makes Kalshi's regulatory structure important — but it does not eliminate the need to analyze the individual contract.
Does Kalshi send a 1099?
Kalshi does issue several types of 1099s, but its current documentation does not say that your event-contract trading profit is simply reported on a 1099-MISC.
As of 2026, Kalshi says qualifying users may receive:
Tax document | What Kalshi says it reports |
1099-INT | Interest payments |
1099-MISC | Credits and rewards |
1099-B | Proceeds from certain broker transactions involving crypto transfers |
1099-DA | Digital-asset transactions through ZeroHash |
Kalshi separately provides a Profit and Loss (P&L) statement summarizing trading activity. Kalshi says the statement includes profits, losses, fees, and rebates and uses FIFO accounting to calculate P&L.
You can find it under:
Account → Tax Info → Select Year → Profit and Loss Statement
Kalshi updates the P&L information monthly.
The important takeaway is that your P&L statement and your 1099s serve different purposes. Receiving a 1099-MISC for a reward, for example, does not mean that form represents all of your Kalshi trading activity.
You are still responsible for reporting your taxable trading income correctly.
What is Section 1256?
Section 1256 is a special tax regime that applies to certain derivatives, including qualifying regulated futures contracts and certain options.
It has three major features.
The 60/40 rule
Gains and losses on qualifying Section 1256 contracts are generally treated as:
60% long-term capital gains or losses
40% short-term capital gains or losses
This split applies regardless of how long you actually held the contract.
That can be advantageous for active traders because long-term capital gains generally receive lower federal tax rates than short-term gains.
For example, suppose you're in the 35% ordinary income tax bracket and your long-term capital gains rate is 15%.
You earn $10,000 trading contracts during the year.
If all $10,000 were short-term capital gain:
$10,000 × 35% = $3,500 in federal tax
If the contracts instead qualify for Section 1256:
$6,000 × 15% + $4,000 × 35% = $2,300
In this simplified example, Section 1256 treatment reduces the federal tax by $1,200.
This ignores other factors such as the Net Investment Income Tax, state taxes, deductions, and the taxpayer's individual circumstances, but it shows why Section 1256 classification can matter so much.
Mark-to-market at year-end
Qualifying Section 1256 contracts are generally marked to market on the last business day of the tax year.
That means an open position is treated as if it were sold at fair market value even though you haven't actually closed it. The resulting gain or loss is included in that year's taxes, and the position's basis is adjusted so the same income isn't taxed again when you eventually close it.
Form 6781
Section 1256 gains and losses are generally reported using Form 6781, rather than reporting each transaction like an ordinary stock or crypto sale on Form 8949.
Net Section 1256 losses can also potentially be carried back up to three years, subject to specific rules and limitations, to offset qualifying Section 1256 gains from earlier years.
Do Kalshi event contracts qualify for Section 1256?
This is where things become less certain.
Kalshi itself is a CFTC-regulated Designated Contract Market, which is relevant because a qualifying board or exchange is one of the requirements for a regulated futures contract under Section 1256.
But being traded on a DCM does not automatically turn every contract into a Section 1256 contract.
The tax code defines the specific instruments included in Section 1256 and expressly excludes various swaps and similar agreements. It also defines a regulated futures contract as one that both uses a qualifying mark-to-market system and is traded on or subject to the rules of a qualified board or exchange.
That matters because the CFTC currently lists many Kalshi prediction-market products as:
“Swap (Binary Option)”
For example, Kalshi weather, sports, economic, and political event contracts appear in the CFTC's product database under this classification.
That CFTC label does not by itself determine federal tax treatment. Tax classification and regulatory classification are separate questions.
But it does make the analysis more complicated than simply saying:
“Kalshi is regulated, therefore every Kalshi contract gets Section 1256 treatment.”
A taxpayer or tax professional taking a Section 1256 position on Kalshi event contracts should therefore consider the specific contract and the requirements of Section 1256 rather than relying on Kalshi's DCM status alone.
Kalshi perpetual futures are different
Kalshi's perpetual futures present a considerably stronger Section 1256 case.
In May 2026, the CFTC specifically approved Kalshi's BTCPERP product as a futures contract. The CFTC's product database lists BTCPERP as:
Type: Future
rather than as a binary-option swap.
Kalshi has since expanded into additional perpetual futures. The CFTC database similarly lists products such as ETHPERP, DOGEPERP, HYPEPERP, NEARPERP and others as futures, and approved GOLDPERP as a futures contract in September 2026.
Kalshi perpetuals are leveraged derivatives whose value tracks an underlying asset without an expiration date. Open positions use margin, and periodic funding payments help keep the perpetual price aligned with the underlying spot market.
Because these products are explicitly classified as futures and traded through a regulated US futures exchange, they fit much more naturally into a Section 1256 analysis than Kalshi's binary event contracts.
The specific requirements of Section 1256 should still be checked, particularly for newer products, but event contracts and Kalshi perpetual futures should not simply be treated as the same instrument for tax purposes.
Could Kalshi event contracts be treated as capital gains instead?
Potentially.
If an event contract does not qualify for Section 1256, another possible treatment is capital gain or loss.
Under a capital approach, your gain would generally be calculated as:
Proceeds - cost basis = capital gain or loss
Unlike Section 1256, holding period would matter.
Positions held for one year or less would generally produce short-term capital gains or losses, while positions held longer than one year could potentially receive long-term treatment.
In practice, most prediction-market contracts have relatively short lifespans, so long-term treatment would be uncommon.
Reporting may also differ from Section 1256 treatment. Instead of Form 6781, capital-asset transactions are generally reported through Form 8949 and Schedule D.
However, the IRS has not issued guidance specifically stating that Kalshi event contracts should be treated as ordinary capital assets.
Could Kalshi trades be considered gambling?
Wagering treatment is another possibility that cannot simply be ignored.
Prediction markets share obvious characteristics with wagering: a trader puts money at risk based on an uncertain future event and receives a payout depending on the outcome.
If Kalshi event contracts were treated as wagering transactions, winnings and losses would be subject to the tax rules for gambling rather than Section 1256 or ordinary capital gains.
That distinction became even more important in 2026.
Beginning in tax year 2026, the deduction for wagering losses is limited to 90% of gambling losses, and no more than total gambling winnings.
For example, suppose you had:
$100,000 of winning wagers $100,000 of losing wagers
Economically, you broke even.
But under the 2026 wagering-loss limitation, only $90,000 of those losses may be deductible. That can potentially leave a taxpayer with $10,000 of taxable income despite having no economic profit.
The classification question therefore has a very real financial impact.
Section 1256 vs. capital gains vs. wagering treatment
Here's the simplified comparison:
Section 1256 | Capital treatment | Wagering treatment | |
Tax character | 60% long-term / 40% short-term | Short- or long-term based on holding period | Gambling income/loss |
Year-end mark-to-market | Yes | Generally no | No |
Primary tax form | Form 6781 | Form 8949 / Schedule D | Gambling income and applicable deduction reporting |
Loss treatment | Special Section 1256 rules | Capital-loss rules | 90% loss limitation beginning in 2026 |
Kalshi event contracts | Possible, but unsettled | Possible | Possible |
Kalshi perpetual futures | Much stronger Section 1256 case | Less likely if Section 1256 applies | Generally not the natural framework |
You should not simply choose whichever approach creates the lowest tax bill.
The correct treatment depends on the legal characteristics of the contract and how existing tax rules apply to it.
How to file your Kalshi taxes
Start with Kalshi's own records.
Download your P&L statement from the Tax Info section of your account and gather any 1099 forms Kalshi or its service providers issued to you.
Remember that these documents may report different categories of activity.
For example, a 1099-MISC reporting Kalshi credits or rewards should not be confused with your trading P&L.
From there, determine how each type of activity is being characterized.
If Section 1256 applies
Qualifying gains and losses generally go on Form 6781 and receive 60/40 treatment.
Open qualifying positions are also subject to year-end mark-to-market rules.
If capital treatment applies
Trades would generally be reported on Form 8949 and Schedule D, with short- or long-term treatment determined by your holding period.
If wagering treatment applies
Winnings and losses would instead be reported under the applicable gambling rules, including the new 2026 limitation on deductible wagering losses.
If you trade both event contracts and perpetual futures, don't assume that both products necessarily belong in the same tax category.
What records should Kalshi traders keep?
Keep copies of:
Your annual Kalshi P&L statement
Any 1099-INT, 1099-MISC, 1099-B, or 1099-DA you receive
Individual trade history
Deposits and withdrawals
Fees and rebates
Perpetual-futures funding payments
Open positions at year-end
Any adjustments you make to Kalshi's reported P&L
Kalshi says its P&L calculation uses FIFO and includes fees and rebates. Your filing methodology should be reconciled against the records you ultimately report on your tax return.
How Awaken handles Kalshi taxes
Awaken supports Kalshi activity alongside your crypto wallets and exchanges, giving you a single place to reconcile your trading history.
Connect your Kalshi account and Awaken can import your trading activity, realized P&L, fees, perpetual-futures positions, funding payments, and other relevant transactions.
This is particularly useful if you use Kalshi alongside crypto exchanges and on-chain platforms, where relying on separate spreadsheets or tax statements can make reconciliation difficult.
Because different Kalshi products may require different tax treatment, Awaken keeps regulated trading activity separate from ordinary spot-crypto disposals so that you or your tax professional can apply the appropriate filing treatment.
Awaken also provides downloadable transaction and regulated-product reporting that can be used when preparing forms such as Form 6781 where Section 1256 treatment applies.
Kalshi taxes FAQ
Does Kalshi report to the IRS?
Kalshi provides several IRS information returns when applicable, including Forms 1099-INT, 1099-MISC, 1099-B, and 1099-DA for specific types of activity. Kalshi also provides users with a separate trading P&L statement.
Whether or not you receive a particular form, you are responsible for reporting taxable Kalshi income and trading activity.
Does Kalshi send a 1099-MISC for trading profits?
Kalshi's current tax documentation says its 1099-MISC reports credits and rewards, not simply all of your prediction-market trading profits.
Trading activity is instead summarized separately in Kalshi's P&L statement.
Where can I find my Kalshi tax documents?
In your Kalshi account, go to:
Account → Tax Info
From there you can select a tax year and access your available tax forms and P&L statement.
Are Kalshi winnings taxed as capital gains?
They may be, depending on the tax treatment applied to the contract.
Possible frameworks include Section 1256 treatment, ordinary capital treatment, or wagering treatment. The IRS has not issued specific guidance conclusively resolving the treatment of all Kalshi event contracts.
Do Kalshi trades qualify for the 60/40 rule?
Potentially, but not automatically.
The 60/40 rule applies to qualifying Section 1256 contracts. Kalshi's status as a CFTC-designated contract market supports the analysis, but each product still needs to satisfy the requirements of Section 1256.
Kalshi event contracts are generally classified by the CFTC as binary-option swaps, making their treatment less clear.
Kalshi's perpetual futures have a stronger Section 1256 case because the CFTC explicitly classifies those instruments as futures.
Are Kalshi perpetual futures Section 1256 contracts?
Kalshi perpetuals are explicitly classified by the CFTC as futures contracts and trade through a CFTC-regulated Designated Contract Market, which makes the Section 1256 argument considerably stronger than it is for Kalshi's event contracts.
The requirements of Section 1256 should still be confirmed for the specific product and taxpayer.
Do I owe taxes on Kalshi positions that are still open at the end of the year?
If a position qualifies for Section 1256 treatment, generally yes.
Section 1256 contracts are marked to market at year-end, meaning the contract is treated as if it were sold for fair market value on the last business day of the year.
If Section 1256 does not apply, normal realization rules may produce a different result.
What form do I use for Kalshi taxes?
It depends on how the activity is characterized.
Qualifying Section 1256 contracts generally go on Form 6781. Capital-asset sales generally go through Form 8949 and Schedule D. Wagering treatment follows the tax rules applicable to gambling income and losses.
Can Kalshi losses offset gains?
Yes, but the rules depend on the tax treatment.
Section 1256 losses receive special treatment and may potentially be carried back against qualifying Section 1256 gains from prior years.
Capital losses follow normal capital-loss rules.
If the trades are treated as wagering, the federal deduction for wagering losses is limited beginning in 2026 to 90% of losses and no more than gambling winnings.
The bottom line
Kalshi's status as a regulated US derivatives exchange makes its taxes different from those of most prediction markets — but regulated does not automatically mean Section 1256.
For Kalshi event contracts, Section 1256 is a plausible but unsettled position. The CFTC generally classifies these products as binary-option swaps, and the IRS has not issued prediction-market-specific guidance conclusively determining their treatment.
Kalshi perpetual futures are different. The CFTC explicitly classifies products such as BTCPERP as futures, giving them a much stronger connection to the Section 1256 framework.
Whichever treatment applies, start by downloading your Kalshi P&L statement and any 1099s you've received, keep the different categories of activity separate, and make sure your tax return reflects your complete trading history rather than relying on a single tax form.
Awaken can import and reconcile your Kalshi activity alongside the rest of your crypto and trading portfolio, making it much easier to give yourself — or your accountant — a complete picture at tax time.
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