Gambling taxes overview – What you need to know about gambling tax rates by state
Once upon a time, Nevada was the only 100% legal state Americans could visit to enjoy betting. While bettors always had to pay a Nevada state tax on gambling winnings, residents of other states simply weren’t free to gamble at all
Nowadays,
US gambling
is rapidly becoming big business nationwide – and that’s all thanks to the Supreme Court’s landmark overturning of PASPA in 2018 that now have some states, such as New Jersey, Nevada, and Pennsylvania, having specific laws governing gambling and sports betting, while others only allow online betting on social or sweepstakes platforms. Many states remain opposed to these activities, meaning that users from those regions cannot access any form of betting. So asides these few states that don’t accept any form of betting, naturally, this is fantastic news – although it does not mean that each state has developed its own unique rules regarding tax.
Most gambling companies both on and offline have a standard practice of withholding 25% of players’ gambling winnings for tax purposes. But depending on your state, you may need to provide information regarding your winnings on your tax return, or even pay taxes on winnings individually.
Which US regions charge gambling taxes by state?
The general rule of thumb is simple – whichever US state you’re betting in, you’ll probably need to include gambling winnings in your tax return, whether those winnings are taxed via the operator or not. At the time of writing, here are the US states that taxes on gambling winnings apply to:
| Arizona | Delaware | Maryland | Nebraska | North Carolina | Virginia |
| Arkansas | Illinois | Massachusetts | Nevada | Ohio | West Virginia |
| California | Indiana | Michigan | New Hampshire | Oregon | Wyoming |
| Colorado | Iowa | Mississippi | New Jersey | Pennsylvania | |
| Connecticut | Louisiana | Montana | New York | Rhode Island | |
We’ll explore the finer rules regarding each region later in this article, so you can understand how the NY state gambling tax rate differs from the Pennsylvania state tax on gambling winnings, and so on. For now, let’s look at what else you need to know.
How winnings affect gambling taxes by state
Like everything tax-related, gambling income is subject to certain thresholds.
While you should always double-check the rules governing your state before filing a return, on a national level, the IRS requires operators to withhold 24% of your winnings for income taxes once those winnings exceed:
- $600 if betting on horse racing
- $1,200 if won on slots or bingo
- $1,500 (minus winnings) if won on keno games
- $5,000 (minus your buy-in price) if won via poker
How to pay your gambling taxes – what to know before figuring out your gambling tax rate by state
Whether you’ve won at Nevada casino resorts on the ground or at
NJ online casinos, you’ll usually need to include your winnings in your tax return.
When paying gambling taxes by state, you’ll usually be expected to fill in IRS Form W2G, which will be issued to you once you have exceeded the thresholds we mentioned above. If you don’t receive a W2G form, however, you still need to report
all
your gambling winnings via your regular tax return – even if those winnings amount to just a few dollars.
Current state-by-state gambling taxes in the USA – What gambling tax rate by state will you need to pay?
As gambling tax rates by state differ depending on where you live, it’s important to do your research and to fully understand the legislation affecting gambling taxes in your area.
Below, we’ve provided a brief overview of the latest rules affecting gambling tax rates by state. That said, while this information is accurate at the time of writing, you should be aware that gambling tax legislation is updated regularly and it’s important to be extra cautious to ensure you know precisely what is expected of you before submitting your next return.
Arizona – State tax on gambling winnings
Gambling tax rates in The Grand Canyon State are currently set by Arizona’s Department of Gaming. All gambling businesses are charged:
- An 8% tax rate on retail sports betting operations
- A 10% tax rate on online betting operations
There’s also an Arizona state tax on gambling winnings imposed on players, as gambling winnings in AZ are considered “income” – which means you must report all winnings on both state and federal tax returns. This applies regardless of whether you have received a W2G.
Arkansas – State tax on gambling winnings
So, what is the gambling tax rate by state in Arkansas? Well, gambling winnings are classed as fully taxable – which means if you are a Natural State resident, you’ll need to report any winnings on your tax return. You can do this using form AR-OI via the following lines:
- Line 4 for “gambling winnings”
- Line 5 for “lottery/contest winnings”
The Arkansas state tax on gambling winnings, which applies largely to casino gaming, is payable at a rate of 13% on the first $150 million of casino gaming receipts, then 20% thereafter.
California – State tax on gambling winnings
California is another state where winnings are treated as normal income. The rate of California state tax on gambling winnings you’ll need to pay can range from 1% to 13.3%.
Colorado – State tax on gambling winnings
As we’ve seen, the gambling tax rate by state differs depending on where you are in the US. In Colorado, you’ll be expected to pay 10% of all casino and sportsbook winnings to the state.
The money made via the Colorado state tax on gambling winnings reportedly goes toward the state’s Colorado Water Plan.
Connecticut – State tax on gambling winnings
In Connecticut, state law requires operators to withhold 6.99% of all gambling winnings that are deemed as either:
- Reportable for purposes of federal tax
- Subject to federal withholding tax
In short, this means that while you may have to report your gambling activities to the state as part of your tax return, you won’t directly pay a Connecticut state tax on gambling winnings.
Delaware – State tax on gambling winnings
In The Blue Hen State, 50% of lottery monopoly revenue is taxed via a revenue-sharing model, which sees revenue shared between the state and operators, making Delaware state tax on gambling winnings a little different to the tax policies we’ve seen elsewhere.
Illinois – State tax on gambling winnings
Ordinarily, Illinois imposes a flat, 4.95% tax rate on all income, which reportedly includes gambling winnings. On top of this Illinois state tax on gambling winnings, you may need to pay federal taxes ranging from 10-37% depending on your income level.
Indiana – State tax on gambling winnings
In Indiana, there is a personal income tax rate of 3.23% and almost all gambling winnings are subject to this. That said, before filing your Indiana state tax on gambling winnings it’s worth noting that:
- Casinos will usually withhold 24% of your winnings for tax purposes already
- All winnings must be reported – including those under $5,000
Iowa – State tax on gambling winnings
As in several other states, gambling is taxed both locally and federally in Iowa. The Hawkeye State’s latest rules dictate that
- 5% of gambling wins are withheld for state purposes
- 24% is withheld for federal taxes
You’ll need to report your winnings as part of the Iowa state tax on gambling winnings rules.
Louisiana – State tax on gambling winnings
Sports betting went legal in Louisiana in October 2021. The gambling tax rate by state here is:
- 10% for in-person sports wagers
- 15% for mobile and online sports betting
You’ll pay a Louisiana state tax on gambling winnings at the relevant LA rate of income tax.
Maryland – State tax on gambling winnings
Marylanders need to be most concerned about lottery winnings – as 24% will be deducted in federal tax and 8.95% in state tax. You must also pay a Maryland state tax on gambling winnings derived from racetrack betting and other forms of gambling.
Massachusetts state tax on gambling winnings
In The Bay State, you’ll need to pay a Massachusetts state tax on gambling winnings of 5% – which is the same rate regular income attracts.
Michigan – State tax on gambling winnings
Michigan residents pay a state tax rate of 4.25%. At the time of writing, the Michigan state tax on gambling winnings is the same.
Mississippi – State tax on gambling winnings
If you live in The Hospitality State, there’s a 3% tax levied on gambling-related winnings received from all operators licensed under the Mississippi Gaming Control Act.
A percentage of your winnings that meets the Mississippi state tax on gambling winnings requirements will be withheld by the operator in question.
Montana – State tax on gambling winnings
In Montana, the Montana state tax on gambling winnings comes in at a rate of revenue minus management fees.
Nebraska – State tax on gambling winnings
The Nebraska state tax on gambling winnings follows a “retail only” model with a tax rate of 20%.
Nevada – State tax on gambling winnings
Multiple, mobile, and retail gambling are subject to taxes in Nevada. Gambling winnings will attract tax at graduated tax rates. The latest rates are:
- 3.5% on winnings below $50,000
- 4.5% on winnings between $50,000 and $134,000
- 6.75% on winnings of more than $134,000
New Hampshire – State tax on gambling winnings
Gambling taxes by state are often difficult to grasp, but the outlook in NH is pretty straightforward.
In short, a New Hampshire state tax on gambling winnings of 10% is imposed on all residents, regardless of where their winnings derive from.
New Jersey – State tax on gambling winnings
NJ has a New Jersey state tax on gambling winnings rate of 3% (the same as income tax), but withholding rates can differ, as follows:
- 5% for lottery winnings from $10,001 to $500,000
- 8% for lottery winnings of more than $500,000
- 8% for lottery winnings of more than $10,000 where a taxpayer ID is not provided
You should include any gambling-related winnings under the category of “net gambling winnings” when filing your tax return.
New York – State tax on gambling winnings
In The Empire State, all gambling winnings are taxable and subject to a 24% federal tax rate on top of an NY state gambling tax rate, which can range from:
- 4% for up to $8,500
- 4.5% for between $8,501 and $11,700
- 5.25% for between $11,701 and $13,900
- 5.90% for between $13,901 and $21,400
- 6.09% for between $21,401 and $80,650
- 6.41% for between $80,651 and $215,400
- 6.85% for between $215,401 and $1,077,550
- 8.82% for above $1,077,550
North Carolina – State tax on gambling winnings
As far as gambling tax rates by state in NC go, your gambling winnings are usually subject to a flat rate of 24%.
Ohio – State tax on gambling winnings
The Ohio state tax on gambling winnings all comes down to withholding. Ohio licensed casinos must automatically withhold 4% of any winnings.
Oregon – State tax on gambling winnings
It’s mainly federal taxes you’ll have to worry about in Oregon, but lottery winnings are also taxed at state-level if you win $600 or more, so be careful.
Pennsylvania – State tax on gambling winnings
The Pennsylvania state tax on gambling winnings comes in at 3.07%, and all winnings should be reported via form PA-40, Schedule T.
Whether you’re playing with an up-and-coming provider or the very
best PA online casino, any winnings of more than $5,000 will be withheld by your operator.
Rhode Island – State tax on gambling winnings
24% federal taxes and a 5.99% Rhode Island state tax on gambling winnings apply in RI.
Virginia – State tax on gambling winnings
Gambling winnings in Virginia attract a Virginia state tax on gambling winnings that can range from 2% to 5.75% depending on your unique situation.
West Virginia – State tax on gambling winnings
In West Virginia, anything you win via gambling/lottery activities is deemed taxable. The West Virginia state tax on gambling winnings you’ll pay can range from 3 to 6.5%.
Wyoming – State tax on gambling winnings
Over in The Cowboy State, all legal sports betting activities are taxed at a rate of 10% of net proceeds.
Conclusion – Know your gambling taxes by state inside-out before betting
Gambling tax rates by state vary dramatically – as do the rules regarding enjoying legal gambling activities themselves within state boundaries. The key things to remember when gambling in the US are that operators will normally withhold 24% of your winnings for IRS purposes before paying out, and you’ll usually need to include details of all winnings in your tax return.
Whether you’re a regular bettor or claiming a one-off
casino bonus, it’s important to find out if casino gambling is legal in your state where you’re presented with plenty of great operators to choose from and our experts here at Wetten.com are always available to help you find the perfect one and to also familiarize yourself with the latest tax legislation in your state both before you bet, and before you file your next return.
The best US bonuses for April
Gambling taxes by state FAQ
💸 What is the tax rate on online betting winnings?
If you intend to indulge in sports and casino betting activities on US soil, there’s a chance you might have to pay taxes on your winnings – even if you’re using online rather than in-person casinos. At the time of writing, the rules governing gambling taxes vary between different states, so you’re going to want to check out Wetten.com’s latest guides to find out exactly what you’ll be expected to pay.
💰 Which US state charges the highest gambling taxes?
Several US states count winnings accumulated via sports betting or casino gambling as taxable income – which means you’ll need to pay a certain percentage of what you’ve won to Uncle Sam. Tax rates differ on a state-by-state basis, which is why it’s super-important to double and triple-check the rules affecting your region before you bet on any sports or online casino games. Wetten.com has all the information you need.
💵 Are sports betting winnings taxable in the US?
Whether or not you’ll need to pay taxes on your sports betting winnings depends almost entirely on which US state you are betting from. Ever since legal betting began to expand across the US after the Supreme Court’s landmark 2018 PASPA ruling, individual states have started setting up their own unique tax rules. Discover everything you need to know with Wetten.com today.
🤑 Are US gambling taxes expensive?
Like almost anything in the US, tax rates vary on a state-by-state basis, which means that how cheap – or how expensive – your gambling taxes may be will always be dependent on location. While residents of Nevada will pay low rates, people living in the likes of New York or Pennsylvania may be expected to pay much more, which is why it’s vital you read Wetten.com’s latest gambling tax tips to determine what you should expect.
🤔 Is gambling classed as taxable income in the US?
If you’re betting on sports or casino games in the US – whether that be online or at a brick-and-mortar casino – there’s a chance you’ll need to pay taxes on your winnings. Again this will depend on your location as to whether it is classed as taxable income and the amount you’ll need to pay can also vary depending on your residency location. Visit Wetten.com today to get your hands on state-by-state taxation info.
