Prediction market tax calculator

What the calculator assumes

• One tax bracket for this trading. A large win can push part of it into a higher bracket.
• Every position is short-term, which is true for almost every prediction market trade.
• Section 1256 only for CFTC-regulated exchanges such as Kalshi and Polymarket US.
• Gambling without the standard deduction effect. Claiming losses means giving up the standard deduction, which the gambling loss calculator shows.
• No state tax. Find your state’s rules.

Why winnings and losses are asked for separately

Three of the methods only care about your net result. Gambling doesn’t: it taxes your winnings and treats losses as a separate deduction that only itemizers get. A trader who won $30,000 and lost $20,000 reports $30,000 of gambling income, not $10,000.

The four methods in one line each

• Capital gains: net profit at your ordinary rate; a net loss deducts up to $3,000 a year and carries forward.
• Ordinary income: net profit at your ordinary rate; how a net loss works depends on your facts.
• Gambling: winnings taxed in full; losses only if you itemize, and only 90% of them from 2026.
• Section 1256: 60% taxed at the long-term rate, even for a one-day position; CFTC exchanges only.

More: how prediction market trades are taxed, the Kalshi and Polymarket versions of this calculator, and what a win or a loss is worth under each method.