See what your Kalshi losses could be worth at tax time.

How we calculate

What we assume, and how the range works

We treat your figure as your all-time net

Kalshi and Polymarket have only been live in the US a few years, so a single lifetime win/loss number covers roughly your whole history here. Kalshi launched in July 2021, so there is not much history to miss. What a single number cannot do is split your total by tax year, and the year a loss falls in decides which return it goes on and when you collect it. Connect your account and Realize replaces this assumption with your real per-trade record, year by year.

A Kalshi year that ended before you connected is still reachable

Section 1256 treats a position you were still holding on December 31 as sold at that day’s price, so a past year you ended with an open position cannot be filed without that day’s mark. Kalshi publishes market price history, and Realize backfills the year-end mark from it, so a year you traded long before you had ever heard of us is still a year we can rebuild from your fills and the exchange’s own prices.

Kalshi shows its work, and Realize starts from it

Kalshi publishes a per-year profit-and-loss statement and names the method behind it: "We use the First-In-First-Out (FIFO) accounting method to compute profits and losses", which is the same lot matching Realize applies to your fills. Its 1099s cover interest, credits and rewards, crypto-transfer proceeds and digital-asset transactions rather than your event-contract result, and they go only to members who cross the IRS thresholds, so a form arriving or not arriving does not change what is reportable. Kalshi’s own list of what it provides.

Kalshi’s fees are already inside your figure

Kalshi charges the order that crosses the spread, and on some markets a fee on a resting order once it fills; the fee scales with the contract price, so it is largest around 50 cents and shrinks toward the ends. It comes out of the trade itself, so your all-time net is already net of it, which is where it belongs: a trading fee adjusts what you paid and what you received rather than being a separate deduction. Kalshi reports the fee per fill, so a connected account gets the exact figure back year by year. Kalshi’s fee schedule.

The range spans the lowest and highest federal brackets

A loss deduction is worth its size times your ordinary tax rate. We do not ask your income, so we show both ends: what it is worth at the 10% bracket and at the 37% bracket. Your real savings land in between, set by your income and filing status. The figure above is the lifetime total, not this year’s: capital losses cancel capital gains in full, but only $3,000 a year of what is left comes off your ordinary income, and the rest carries forward with no expiry. With no gains to offset, a $100,000 loss takes about 34 years of returns to collect in full.

What if I’m up?

Whether §1256 helps a winning year comes down to how much you make. A win is taxed as short-term (ordinary income) by default, at your regular tax rate. §1256 taxes 60% of it at the lower long-term capital-gains rate instead. As long as your ordinary rate is higher than that long-term rate, filing under §1256 lowers your bill, and the wider the gap, the more you save, which is why higher earners benefit most. If your income is low enough that the two rates are close, there is little to gain either way.

Why §1256, and the three-year carryback

We lead with §1256, the most favorable read for CFTC-regulated prediction markets like Kalshi: gains and losses split 60% long-term and 40% short-term, whatever the holding period. These contracts almost always settle within a year, so a winning year would otherwise be taxed entirely as short-term (ordinary) gains, the 60/40 split moves 60% of it to the lower long-term rate, which saves more the higher your bracket. A losing year is even better: a net §1256 loss can carry back up to three years against prior §1256 gains for a refund, the payday. Read the full §1256 60/40 guide.

It is a strong but unsettled position

The IRS has issued no guidance on prediction-market contracts and could challenge §1256 treatment, even for years already filed. Realize shows the work and the more conservative treatment too. The final call is yours and your CPA’s.

Federal only

This estimate ignores state tax, the net investment income tax (NIIT), and any other capital activity you have. It is not tax advice.