Do Kalshi and Polymarket Withhold Taxes From Your Winnings?

Assume no tax has been taken out. Kalshi's and Robinhood's tax pages don't describe any withholding on event-contract results, and an on-chain Polymarket redemption has no payer to withhold anything. So your payout is generally the full amount, and the tax is still yours to pay. The exception to watch for is 24% backup withholding, which can hit reportable payments if your taxpayer ID is missing or wrong.

OddsFile is software, not tax advice. The IRS has not issued guidance on how prediction-market contracts are taxed. This article explains the options and the sources behind them; a tax professional can tell you which position fits your situation.

What each venue says

A missing statement isn't proof. It's the reason to look at your own records rather than rely on a blog, including this one.

How to check your own account

1. On Kalshi, compare a settled position's payout with your balance change. A $1 per contract settlement should show the full amount, less any fee.
2. Open any 1099 you received and read the federal income tax withheld box. On Form 1099-MISC, box 4 shows backup withholding.
3. Look for notices that a taxpayer ID is missing, or that your account needs a W-9.

If tax was withheld, you claim it as a payment on your return. If there's nothing in that box, nothing was withheld.

When backup withholding can apply

Backup withholding is the IRS's fallback for reportable payments. The rate is 24%, and it can apply to most kinds of payments reported on Forms 1099 and W-2G, including interest and broker payments. It happens in two main cases:

• You didn't give the payer a correct taxpayer ID.
• The IRS told the payer to withhold, because you underreported interest or dividends, or didn't certify that you aren't subject to it.

To stop it, you fix the cause: give the correct number, resolve the underreporting, or file missing returns.

For Kalshi, the practical trigger would be interest or rewards. Its APY page says a Social Security number is required to receive payments above $10 a year. Make sure your details on file are right.

For payments covered by the 2026 rule change, Notice 2025-62 raised the $600 reporting threshold to $2,000. Backup withholding on those payment types uses the same threshold. Interest has its own lower threshold.

Why it isn't like a casino

Casinos and sportsbooks do withhold in certain cases. Publication 505 says gambling winnings of more than $5,000 from sweepstakes, wagering pools and lotteries, and from any other wager paying at least 300 times the bet, are subject to 24% withholding, and a Form W-2G follows.

That rule depends on the payment being gambling winnings. Whether an event-contract payout is a gambling payment is the same unresolved question that runs through this site, and venues generally don't issue W-2Gs for contract results. A $6,000 Kalshi settlement isn't handled like a $6,000 slot jackpot. If the IRS ever issues guidance, reporting and withholding could change, and Robinhood says it would respond accordingly if that happens.

What to do without withholding

Your options depend on how much you expect to owe.

A workable share to set aside is your marginal bracket plus your state rate. See what tax rate you pay. If you might use gambling treatment, base it on gross winnings, since that can be much bigger than your net.

Worked example

You're a single filer in the 24% bracket, with a 5% state tax, and you close 2026 up $8,000 on Kalshi.

If you spent the whole $8,000 in December, you still owe $2,320 in April.

Crypto rails

If you withdraw through crypto and an exchange sells your stablecoins, that exchange may report the sale on Form 1099-DA. The rules let it withhold in certain backup withholding cases. That's about the sale of the coin, not your trading profit.

FAQ

Why did my Kalshi payout seem low?

Check fees first. Kalshi's P&L includes fees and any rebates. If you still can't explain a gap, ask support whether anything was withheld.

Can I ask Kalshi to withhold for me?

We found no such option. Use estimated payments or your W-4.

If nothing is withheld, is it tax-free?

No. Withholding is only one way of paying. Income is taxable whether or not anyone withheld.

Will Polymarket ever withhold?

The on-chain exchange has no mechanism for it today. A regulated US venue could have different rules, so check its documents.

Run the free OddsFile check: paste a Polymarket or Hyperliquid address and see your 2026 P&L under each treatment, no signup. Then set aside the tax on the number you see. For the full Kalshi picture, read Kalshi taxes and the 1099.