Gambling taxes overview - the importance of knowing the gambling tax rate by state
While there may be no guarantees in regards to winning when betting online, you can almost guarantee that any winnings will have some form of federal and state tax associated with them.
By law, gamblers are required to itemize their online gambling activity when submitting their end-of-year tax returns. In the eyes of the IRS, winnings from gambling and your professional salary will all contribute to your total income. Of course, any losses when gambling can be deducted - just like expenses when detailing your salaried annual wage.
Alongside federal tax, gambling taxes by state will also need to be taken into consideration. Due to the differences in gambling tax rates by state, this poses greater confusion when itemizing winnings for those who travel or consider gambling as a profession.
Regardless of how you wager, it pays to get yourself acquainted with the W2-G form, make use of our latest guide to discover the current gambling tax rates by state, and start to pick up good habits surrounding your winning and losing receipts.
What is the W2-G form?
Although all types of gambling winnings are taxable, specific thresholds and gaming genres require you to fill out a W2-G form. The W2-G form is an official document that will be sent to you from your preferred operator, once you have accumulated enough winnings.
Whether your preferences lie at the racetrack, slot machine, or with online sports betting in the US, expect to receive a W2-G form only when:
- You have made over $600 at the racetrack and the payout is 300x the original wager
- You have won $1200 playing slots or Bingo
- You have won $1500+ playing Keno
- You have walked away with over $5000 playing poker (minus your original buy-in)
Any players who are fortunate enough to surpass these thresholds will find their winnings subject to federal taxes at a flat rate of 24%. Please also note that winnings from roulette, blackjack, craps, and other games that are considered skill-based, will not be required to be entered on a W2-G form.
Recording your wins and losses As discussed above, it will be evident if a W2-G form is required as your preferred operator will send this to you once a certain threshold has been surpassed. For good practise, we would also suggest keeping a receipt of your winning and losing wagers, in order to make the process easier at the end of the year.
For professional gamblers, you will need to itemize both winnings and losses as part of your business income. For casual bettors, please make a note of your winning and losing wagers in the other income section on form 1040.
Remember, losses can also be claimed up to the value of your winnings. For example, should you trigger the W2-G form after a win of $1700 playing Keno, losses of equivalent value can be offset against it, allowing bettors to effectively break even. Any losses over this value will not be considered, as a negative value cannot be put forward.
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Current state-by-state gambling taxes in the USA - a closer look at the gambling tax rates by state
In this next section of our guide on gambling taxes by state, our experts highlight precisely what percentage of your winnings will be taxed when betting on sports or having a flutter across the casino in the US.
Northeast
Connecticut
If you plan on gambling in Connecticut, expect to pay a 6.99% state tax on all gambling winnings over $600.
Delaware
Delaware has a revenue pact with Rhode Island that sees a tax rate of 51% across both states.
Maine
Alongside the Federal tax of 24%, Maine State will add a 5% tax to all winnings over $5000.
Maryland
Maryland residents will be stung with a state tax of 8.75% on anything over $600. Visitors, on the other hand, will see a 7% state tax added to their winnings.
Massachusetts
You will be fortunate enough to win $600 tax-free in Massachusetts; however, any cent over that will be subject to a 5% state tax.
New Hampshire
For those of you planning to wager online, expect a 51% state tax to be applied. Those of you wagering in person can expect a 50% tax added to all winnings.
New Jersey
The Garden State likes to keep things simple by adding an additional 3% state tax to all types of winnings.
New York
The busiest online betting hub across the US is subject to a 13.5% state tax, while those opting to make use of its retail sites can expect to be taxed 8.5%.
Pennsylvania
Much like the Garden State, Pennsylvania looks to keep things simple by adding a 3.07% tax to any winnings made across the board.
Rhode Island
Rhode Island has a revenue pact with Delaware that sees a tax rate of 51% across both states.
Vermont
Over in the Green Mountain State, you can enjoy winnings of up to $600 before a 6% state tax is applied.
Midwest
Illinois
Before you sign yourself up for one of the best online betting sites Illinois has to offer, it is worth noting that Illinois classes all gambling winnings as personal income. In other words, depending on your income, you’ll pay between 10% and 37%.
Indiana
Indiana is a sweet spot for bettors that can generate some winnings - a generous 3.23% state tax is applied across the board.
Iowa
Things are still kept nice and simple when heading to Iowa, where you’ll find a state tax of 5% added to all sorts of gambling winnings.
Kansas
You’ll have the chance to keep $5000 away from any form of Kansas state tax; however, expect 5% of all winnings to be taken once you surpass that threshold.
Michigan
The Wolverine State will take a 4.25% cut of all your gambling winnings, regardless of the value.
Minnesota
Minnesota leaves it all up to the IRS, allowing bettors to wager across the state without any state tax added to their winnings.
Missouri
You’ll be given a $601 head start in Missouri before a state tax of 4% is added to any dollar above this value.
Nebraska
Any big winnings here will be subject to a 24% federal tax and 20% state tax.
North Dakota
When we consider gambling, North Dakota isn’t exactly thriving; however, expect to pay 1% on any charity casino wins.
Ohio
Irrespective of how you accumulate your wins over in Ohio, you will need to factor in a 4% state tax.
South Dakota
No additional taxes are added to lottery winnings in South Dakota.
Wisconsin
Straight from the off, you’ll be subjected to a 7.65% state tax in Wisconsin. This will only increase as your winnings do!
South
Alabama
Those opting to wager in Alabama can expect to be taxed 2% on $500 worth of winnings. As winnings increase, taxes increase, too, with a maximum tax of 5% applied.
Arkansas
Bettors from Arkansas will take home all their winnings, up to $1200. Anything beyond this is subject to a standard 3% rate.
Florida
You’ll have a $5000 cap before the 24% tax is added in Florida, unless your winnings have come from sports betting. If so, expect state taxes of 13.75% to be added.
Georgia
Regardless of your home state, Georgia will request 6% of any winnings obtained on their soil.
Kentucky
Things are kept simple in Kentucky, with a 6% tax applied to all winnings, regardless of betting style.
Louisiana
Retail bettors in Louisiana will need to pay 10% taxes on any winnings, while those opting to wager online can expect to pay a slightly higher 15%.
Mississippi
Should you hit the specific thresholds, a 24% federal tax and 3% state tax will be taken by your chosen operator.
North Carolina
State tax is kept nice and simple in North Carolina. You’ll pay 4% on any winnings, regardless of size.
Oklahoma
As soon as you hit that $1000 threshold, you’ll be stung with a 3% state tax on all winnings.
South Carolina
Any winnings in South Carolina over $3100 are subject to a sliding state tax rate, up to the value of 7%.
Texas
You can expect a 3% state tax to be added to all winnings that trigger a 24% federal tax.
Tennessee
Gamblers need only worry about the IRS when wagering in Tennessee - nothing will be added in the form of state tax to any of those TN gambling wins.
Virginia
Any winnings of less than $3000 will be hit with a 2% state tax; however, should your winnings go beyond $3k, you could receive a state tax of up to 5.75%.
West Virginia
If you are in West Virginia, you will soon see a 5.5% state tax added to any form of gambling winnings.
West
Alaska
Alaskan gamblers will be pleased to hear that they only need to worry about the IRS - no additional state taxes are added to any winnings.
Arizona
AZ gambling winnings will be subject to a state tax that begins at 2.59%. Should your winnings exceed $26,500, expect this tax to be increased to an upper limit of 4.5%.
California
All gambling wins are considered as taxable income across California. In turn, state tax ranges from 1% to 13.3% depending on total income.
Colorado
Should you be fortunate enough to generate some winnings in Colorado, expect the 4.63% flat rate to be applied. This will increase for sportsbook users who will be required to pay 10%.
Hawaii
Professional gamblers will be taxed 4% on out-of-state winnings; however, gambling is illegal across the state itself.
Idaho
All winnings in Idaho are subject to the federal tax of 24% only - result!
Montana
Bingo and Keno wins will be subject to an impressive 1% state tax while all slot victories will incur a 15% state tax.
Nevada
Nevada appears to look after its casual bettors, allowing a $5k threshold before any tax is added. After that, expect a state tax of 25% on all winnings.
New Mexico
Things are kept nice and straightforward in New Mexico, where you’ll have to factor in a 9% tax on all of your sportsbook and casino winnings.
Oregon
All winnings under $600 will be deemed tax-free. Winnings between $600 and $1500 will be subject to an insignificant tax while anything beyond $1.5k will have an 8% state tax added to it.
Utah
All forms of gambling are prohibited in Utah. So, you’ll see no additional state taxes here!
Washington
Nothing. Nil. Zero. Zilch. Except for the 24% that comes as standard from the IRS.
Wyoming
Last on our list is Wyoming. Here, you can expect to pay a 10% state tax on all winnings.
Conclusion - pay attention to the gambling taxes by state
That’s it - we have reached the end of our comprehensive guide on the current gambling taxes by state! We hope that this regularly updated article will prove of great use when the end of the financial year begins to loom.
Tax returns can prove daunting at the best of times without having to worry about the differing gambling tax rate by state(s). For those of you who consider yourselves professional gamblers, please ensure you fill in your gambling winnings as your income, deducting any losses (up to the equivalent value of winnings) along the way. For casual bettors, follow the same approach but enter these details in other income on sheet 1044.
While our experts have taken every precaution to ensure that the details provided are as up-to-date as possible, please consider double-checking the gambling taxes by state, including all relevant betting destinations prior to submitting your return. All state taxes are subject to change and, due to the ever-growing popularity of gambling across the US, are likely to do so at any given moment. For all other general betting queries, please head on back to betting.net™ where we are confident we will have the perfect guide, review, or article for you!
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Gambling Taxes By State FAQs
Why is it important to know the gambling taxes by state?
Although all states are governed by a federal tax rate of 24%, those opting to enjoy California online sports betting will have a completely different experience of winning than those betting on casinos in New Jersey. Find out how the state tax rate contributes to this in our latest guide detailing gambling taxes by state.
What is the current NY state gambling tax rate?
There is no denying the popularity of sports betting in New York. However, before signing yourself up to a top online sportsbook, we suggest finding out more about the tax you are likely to pay on any potential winnings. See how NY compares to the rest of the US in our latest guide on gambling taxes by state.
❓ Do gambling winnings affect my overall income?
In our latest guide on gambling taxes by state, we offer our readers a little insight into how gambling winnings are itemized at the end of the tax year. If you are a professional gambler, the approach is slightly different to those who are more casual. You may also find it differs depending on the state(s) you have wagered in.
