Kalshi taxes, explained

The short answer

• Your Kalshi profit is taxable, and Kalshi does not report it to the IRS.
• You can report the trading result four ways: capital gains, ordinary income, gambling or Section 1256. The main guide prices all four on an example year.
• Rewards, rebates and interest are a separate kind of income: ordinary, always.
• Kalshi does not withhold tax when you withdraw. Withdrawing changes nothing about what you owe.

What Kalshi tells the IRS

Kalshi’s own Documents page is unusually direct about it:

“Kalshi does not report profits/losses to the IRS (the 1099-MISC only contains credit/rewards from Kalshi).”

Here is what can arrive in your Documents tab after the year ends:

The $600 figure people remember is the old 1099-MISC threshold for rewards. It never applied to trading profit. More on the $600 myth. Kalshi doesn’t withhold tax either, and withdrawing isn’t what makes a gain taxable (when you are taxed).

Three kinds of Kalshi income

1. Trading profit or loss

Every closed position, and every contract that settled, gives you a gain or a loss: what you received minus what you paid, with fees on both sides counted. This is the part with four possible treatments. Kalshi is a CFTC-regulated exchange, which is why Section 1256 is even arguable here, but it is contested, and the CFTC’s October proposal to call these contracts swaps made it harder. On Form 8949, Kalshi trades go in box C (short-term) or box F (long-term).

2. Credits, rewards and rebates

Kalshi pays traders through several programs: liquidity rewards for resting orders, volume cashback, hedging rebates and referral credits. All of it is ordinary income, not trading gain, whatever treatment you pick for your trades. Below the 1099-MISC threshold you get no form at all, but it is still income.

3. Interest

Kalshi pays a variable interest rate on your cash balance. It is ordinary interest income, reported on a 1099-INT once it reaches $10.

Which export to download

• The realized P&L file (Documents tab). A ZIP containing every closed position: entry price, exit price, fees, and the open and close times. Settlements and early sales are both in it. This is the file to file from.
• The activity export (Your activity). Every individual fill, plus your deposits and credit rows. It is the only place your reward income is itemized, so download it too.
• Not the single P&L number. One net figure cannot fill Form 8949 and, as above, it mixes in your credits.

Upload both files to WagerMints and it takes your trades from the realized file, checks them against the activity file, and pulls your credits out as a separate ordinary-income total. Then see where each number goes on your return.

Positions still open on December 31

Under capital, ordinary and gambling treatment, an open position is simply not taxed until you close it. Under Section 1256 it is “marked to market”: treated as if you sold it at its December 31 price. If you plan to use Section 1256, note the year-end price of anything you hold before the year rolls over. WagerMints names every open position in your report rather than guessing a price for it.

Kalshi perpetual futures

Kalshi’s perpetual futures are a different instrument, and their tax treatment is even less settled than event contracts: whether they are futures or swaps is being fought out in federal court. The funding payments are ordinary income under every reading. WagerMints does not support perps yet, so leave them out of what you upload. More on perps and tax.

State tax

Your state may tax your Kalshi income too, and state rules do not always follow the federal treatment you pick. The new levies on prediction-market platforms in North Carolina, Kentucky and Illinois fall on the platform, not on you. State details.