Polymarket Taxes: What Changed From 2025 to 2026?

This guide is for U.S. federal income tax planning and was researched from official IRS and CFTC materials available on August 12, 2026. The IRS has not published Polymarket-specific guidance that makes one classification correct for every platform, contract, and taxpayer. Classification should be documented before choosing a form or loss rule.

1. Polymarket taxes in 2025 vs. 2026

2. Form 1099-DA starts with 2025 transactions

Form 1099-DA is the IRS information return for proceeds from broker-facilitated digital-asset dispositions. For 2025, applicable U.S. brokers generally report gross proceeds, while cost basis is optional. For sales after 2025, basis reporting becomes mandatory for covered digital assets acquired after 2025 and continuously held in the reporting broker's custodial account. Noncovered assets and some optional reporting methods can still arrive without basis.

Do not make a blanket assumption that every product carrying the Polymarket name will issue the same form. The reporting entity, custody model, jurisdiction, and contract type matter. The IRS also says a taxpayer must report taxable digital-asset income, gain, or loss whether or not an information return arrives. See the IRS pages on understanding Form 1099-DA and the 2026 Form 1099-DA instructions.

3. Form 8949 has new digital-asset boxes

Beginning with the 2025 Form 8949, digital-asset transactions should not be placed in legacy Box C or Box F. The IRS added six dedicated boxes:

The correct box depends on both holding period and information-return status. For a capital-treatment report with no Form 1099-DA, a short-term digital-asset disposition generally belongs in I and a long-term disposition in L. Confirm the current form instructions when filing. The official details are in the IRS Instructions for Form 8949.

4. FIFO became wallet- or account-specific in 2025

The federal digital-asset ordering rules apply on a wallet-by-wallet or account-by-account basis for acquisitions and dispositions beginning January 1, 2025. If a taxpayer does not make a valid specific identification, FIFO generally selects the earliest units of that same digital asset held in the wallet or account from which the disposition occurred. A universal FIFO pool that silently selects a lot from another wallet is not the default 2025 approach.

Transfers between wallets you control are generally not sales merely because the asset moved, but the original basis and holding period must travel with the units. Keep transaction hashes and wallet provenance so the receiving wallet does not treat a transfer as a zero-basis acquisition.

Taxpayers transitioning from a pre-2025 universal method should review Revenue Procedure 2024-28 and the IRS digital-asset transaction FAQs. Multi-wallet reports deserve professional review because basis allocation can change the timing and amount of reported gain.

5. The 2026 wagering-loss rule can tax a break-even year

If activity is properly classified as wagering, the 2025 loss deduction is generally limited to wagering gains. Beginning in 2026, Internal Revenue Code section 165(d) limits the deduction to the lesser of wagering gains or 90% of wagering losses.

This 90% limitation does not automatically govern positions correctly treated as capital assets. Capital losses follow a different system: they offset capital gains, then generally up to $3,000 of net capital loss may offset other income, with excess carried forward. Do not mix the two classifications transaction-by-transaction merely to obtain the better result. The current wagering rule appears in IRS Publication 505 (2026).

6. Separate Polymarket US records from on-chain Polymarket records

In July 2025, QCX LLC began operating as Polymarket US under a CFTC designated-contract-market designation. During 2026 it certified event contracts described in CFTC filings as binary-option swaps. That regulated exchange structure is not the same record set as historical self-custodied outcome-token activity on Polygon.

Regulatory status does not, by itself, resolve an individual's federal tax classification. It does mean a 2025-versus-2026 review should identify the exact platform, legal entity, contract, wallet or account, and any form received. Keep the two environments separate until a qualified professional has determined how they should be reported. See the CFTC designation record for Polymarket US.

7. Tax thresholds increased for 2026

If a position receives capital treatment, short-term net gains generally use ordinary income rates. Long-term net capital gains generally use 0%, 15%, or 20% brackets, depending on taxable income. The thresholds are indexed, so the 2025 and 2026 numbers are not interchangeable.

These are taxable-income thresholds, not a tax-free allowance for each trade. The authoritative tables are in the IRS inflation adjustments for 2025 and 2026.

8. A safer filing workflow for either year

1. Separate tax years. Use the disposition or settlement date, not the date the return is filed.
2. Separate platforms and wallets. Identify Polymarket US accounts, on-chain wallets, proxy wallets, and self-transfers.
3. Collect every information return. Reconcile 1099-DA, 1099-B, W-2G, or substitute statements to your own records.
4. Document classification. Determine capital, wagering, section 1256, business, or other treatment before selecting forms.
5. Reconstruct basis. Preserve wallet-specific lots, holding periods, fees, and transfers.
6. Use year-correct forms. For capital treatment, use the digital-asset Form 8949 boxes beginning in 2025.
7. Reconcile totals. Match proceeds, deposits, withdrawals, rewards, open positions, and cash flow without treating deposits as profit.

9. Records to save

10. What did not change

• Receiving no form does not eliminate the obligation to report a taxable transaction.
• The federal return still asks a digital-asset question; stablecoins are included in IRS examples.
• Gross proceeds, wallet withdrawals, and account deposits are not the same thing as taxable profit.
• State tax treatment can differ and is not covered by this federal comparison.
• The IRS still has not issued a single Polymarket-specific classification rule for every product.

For the broader filing framework, read the Polymarket tax guide. To prepare a wallet-level transaction report, use the public Polymarket tax scanner and have the result reviewed for your facts.

Official sources

• IRS: 2025 Instructions for Form 8949
• IRS: Understanding Form 1099-DA
• IRS: 2026 Instructions for Form 1099-DA
• IRS: Digital assets
• IRS: Revenue Procedure 2024-28
• IRS: Publication 505 (2026 wagering-loss rule)
• IRS: 2025 inflation adjustments
• IRS: 2026 inflation adjustments
• CFTC: Polymarket US designation record