Polymarket Tax Guide 2026

How Polymarket Bets Are Taxed

Polymarket operates on Polygon where users buy outcome tokens (shares) that pay out $1 if the outcome occurs. Buying shares is acquiring an asset. Selling or redeeming shares triggers a capital gain or loss based on your cost basis in those shares.

Winning Bets

When a Polymarket bet resolves in your favor, your outcome tokens redeem at $1 each. The difference between your purchase price and $1 is a capital gain. Defitax auto-detects Polymarket redemptions and calculates the correct gain.

Losing Bets

When a bet resolves against you, your outcome tokens become worthless. This is a capital loss equal to your cost basis. Defitax automatically recognizes expired Polymarket positions and records the loss.

Why Defitax for Polymarket

Most crypto tax tools don't understand prediction markets at all. Defitax has dedicated transaction types for Polymarket buys, sells, and losses — correctly classified from on-chain data. No manual entry needed.

Frequently Asked Questions

Are Polymarket winnings taxable?

Yes. Polymarket payouts are treated as capital gains — the difference between your cost basis (what you paid for outcome tokens) and the $1 redemption price. Defitax auto-calculates this.

Can I deduct Polymarket losses?

Yes. Expired outcome tokens result in a capital loss equal to your cost basis. This can offset other capital gains. Defitax automatically records Polymarket losses.