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The Grueling Truth - Where Legends Speak / Sports Betting Taxes By State 2024: Updated US Gambling Taxes Guide By Experts

Sports Betting Taxes By State 2024: Updated US Gambling Taxes Guide By Experts

Demystifying US Sports Betting Taxes: What You Need to Know

Last Updated on 05/04/2024
Fact checked by: Simon Briffa

TheGruelingTruth.com is here to be your go-to website for tips and guides that will elevate your online gambling skills to the next level. When lady luck favors you, you’ll need to know the gambling taxes by state where you reside.

This guide will first outline how gambling tax rates by state work in general. This includes separating the federal and the state tax rules. We will then zoom in on exactly how much each state requires you to pay, and this will be different depending on the individual gambling winnings thresholds.

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Gambling taxes overview – A quick intro

Gambling tax rates by state are something every law-abiding citizen should know before they start wagering for the big win. Depending on different state and federal laws, you should give the taxman a cut whenever you have a good night at the casino. Even if you don’t win a taxable amount, your winnings may still have to be included in your annual tax return.

List of US states that charge tax on gambling winnings

Our guide to gambling taxes by state wouldn’t be complete if we didn’t include a list of states that impose a tax on your gambling winnings. If you live in any of the following states, we’ll outline your local gambling tax laws to help you stay on the right side of the law.

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

State vs. federal tax

Before we jump into the nitty-gritty of all the different gambling tax rates by state, it’s essential to know how your winnings affect the federal tax owed. If you win over:

  • $600 at a racetrack
  • $1,200 playing slots or bingo
  • $1,500 playing keno, or
  • $5,000 in a poker tournament,

These winnings must be reported via a W2-G form. Here, the casino or sportsbook will deduct 24% of your winnings on the spot. You may owe more or get some of this money back later, depending on various factors. Though these must still be reported, you do not have to use a W2-G form for winnings made from table games like blackjack, baccarat, craps, or roulette. After covering the federal tax, you may still have to pay the following local taxes, depending on where you stay.

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Current state-by-state gambling taxes in the USA

In this section, we will detail the different gambling tax rates by state as they stand at the time of writing. However, because these numbers can always change based on the sway of political winds, it’s wise to double-check your home state’s legislation. You can never be too careful when dealing with the taxman.

Arizona

Arizona state tax on gambling winnings is based on your total annual winnings. This means that the gambling tax rates by state here can be:

  • 2.59% at the lowest end (0 – $26,501).
  • 4.50% at the highest end ($159,000+).

So, all you need to do is add your winnings to your expected income and pay the percentage that would typically apply.

Arkansas

According to the state’s Gaming Association, Arkansas state tax on gambling winnings here is also based on a person’s annual taxable income. This means you can be charged:

    • 2.0% at the lowest end ($5 000 – $9,999).
  • 5.5% at the highest end ($84,500+).

California

California state tax on gambling winnings is no different from many other gambling tax rates by state in that it is considered a part of your income taxes. You can be charged:

  • 1.0% at the lowest end (0 – $8,809).
  • 13.3% at the highest end ($1,000 000+).

Colorado

Colorado state tax on gambling winnings doesn’t stray from the pattern of being based on your annual income tax. However, individual taxation in the Centennial State is flat and doesn’t rise based on how much you’ve won. So, no matter how much you get, you’d be paying:

  • 4.63% of your total income.

Connecticut

Like Colorado, a flat income tax is imposed on all Connecticut state tax on gambling winnings. According to state law, the CT Lottery is required to charge a rate of:

  • 6.99% on gambling winnings.

This gambling tax rate by state applies to all winnings that are reportable for federal tax purposes or subject to federal tax.

Delaware

The Delaware state tax on gambling winnings is based on the state’s income tax rate. Because the state’s income tax is graduated, this means gamblers from the Diamond State might have to pay:

  • 2.2% – 5.5% if you make $60,000 or less
  • 6.6% if you make more than $60,000.

Illinois

Illinois state tax on gambling winnings is set at the exact figure as the state’s individual annual income tax rate. Like most states on this list, The Land of Lincoln considers gambling winnings to be personal income. This means that you will only be expected to pay at a flat gambling tax rate by state of:

  • 4.95%, regardless of how much you win.

Indiana

One of the list’s lowest flat income tax rates belongs to the Hoosier State. The Indiana state tax on gambling winnings is set at a very modest:

  • 3.23% for all winnings.

This makes Indiana one of the most gambling tax-friendly states on our list.

Iowa

As a state with a very lively gambling culture, fostered by the presence of several popular casinos, poker rooms, and bookmakers, the Iowa state tax on gambling winnings is very fair. You can expect to pay:

  • 5% flat tax on all winnings in the Hawkeye state.

While this isn’t the best gambling tax rate by state, it certainly can’t be deemed unreasonable.

Louisiana

In the Bayou State, gambling winnings are considered to be individual income. This means that the Louisiana state tax on gambling winnings is set at:

  • 6% if the winnings are required to be withheld under federal law.

Maryland

Maryland state tax on gambling winnings is higher than many other states on our list. Even though Maryland has graduated tax rates, residents of the Free State are subject to a flat tax rate of:

  • 8.75% on all gambling winnings.

Massachusetts

The Massachusetts state tax on gambling winnings (the income tax rate) has not changed in over 20 years, except in 2019, when it changed from 5.05% to:

  • 5%, which is required for any winnings reportable to the IRS.

However, if you win less than $8,000 a year, you will not need to file a state income tax return.

Michigan

Since 1 October 2012, the Michigan state tax on gambling winnings has stayed at a flat rate of:

  • 4.25% for all gambling winnings.

This rate applies even if the amount won is less than the amount reportable to the IRS and applies to any funds won at casinos, race tracks, or charitable gambling platforms.

Mississippi

Unlike the other states on this list, gambling winnings are not considered income in Mississippi. However, that does not mean that the state does not impose a gambling tax. The Mississippi state tax on gambling winnings is set very low:

  • 3% non-refundable withholding tax.

As far as gambling tax rates by state go, Mississippi is among the best.

Montana

According to the state lottery and sports wagering commission, Montana state tax on gambling winnings is set at a flat rate of:

  • 6.9%, which is to be deducted and withheld.

While not on the lower end of the spectrum, this rate can be considered fair compared to the states, which can reach over 8% tax.

Nebraska

The Nebraska state tax on gambling winnings is set at the same rate as the state’s income tax. Residents of this state could expect to be paying:

  • 2.46% if you win up to $3,340.
  • 6.84% if you make more than $32,210.

Nevada

Despite being widely recognized for all the fantastic gambling opportunities in Las Vegas, the Nevada state tax on gambling winnings isn’t remarkably low for residents. Based on the state income tax, you could pay:

  • 3.5%, if you win $50,000 or less.
  • 4.5% if you win between $50,000 and $134 000.
  • 6.75% if you get more than $134,000.

New Hampshire

Residents of New Hampshire will be happy to hear that there is no New Hampshire state tax on gambling winnings. The 10% state gambling tax was abandoned in 2011, and it was short-lived, as it had only been introduced in 2009. At the time, there weren’t many gambling opportunities, except horse race betting and lottery draws.

New Jersey

In recent years, New Jersey has come to earn a place as one of America’s major gambling centers. This is not only reflected in the growing number of gambling options residents of this state have but also in the New Jersey state tax on gambling winnings. Both residents and non-residents of the state are expected to pay:

  • 3% tax on their gambling payouts.

New York

In the last 10 years, gambling has dramatically grown in New York State. This has been driven mainly through supportive legislation such as the Expanded Gaming Act, which provided for the opening of commercial casinos on top of pre-existing native establishments. As we speak, the NY state gambling tax rate is set between:

  • 4% at the lower end.
  • 8.82% at the higher end.

North Carolina

North Carolina’s income tax rate fluctuates every couple of years, with new figures being announced regularly. This means that the North Carolina state tax on gambling winnings also fluctuates, as gambling payouts are regarded as income in this state. As it stands, the 2022 gambling tax is:

  • 4.99%, though this is likely to be updated next year.

Ohio

Ohio state tax on gambling winnings is currently set at a very decent rate of:

  • 4% for any and all winnings that are reportable to the IRS.

Oregon

With the Beaver state’s love of charity gaming, lotteries, tribal casinos, and horse racing, you’d expect the Oregon state tax on gambling winnings to be on the low side. However, the state imposes an:

  • 8% tax on winnings worth over $600.

While this is quite the high gambling tax rate by state, the silver lining is winnings under $600 are not taxed at all.

Pennsylvania

Pennsylvania is another one of the few states whose state income tax is separate from the Pennsylvania state tax on gambling winnings. The state levies a

  • 3.07% on all gambling income.

This is to be reported on the PA-40 Schedule T and applies to all forms of gambling, including sports betting in Pennsylvania and casino gaming.

Rhode Island

The Rhode Island state tax on gambling winnings varies, depending on your overall annual income, with the lowest being set at

  • 3.75% for up to $65,250.
    • 4.75% for income between $65,250 and $148,350.
  • 5.99% for income over $148,350.

Virginia

The Virginia state tax on gambling winnings is a bit more complicated than most other state gambling taxes. You are expected to pay

  • 2% if you win $3,000 or less.
  • 3% + $60 for between $3,000 and $5,000.
  • 5% + $120 if win between $5,000 and $17,000.
  • 5.75% + $720 if you get over $17,000.

West Virginia

West Virginia state tax on gambling winnings also depends on how much you earn annually. The rates are as follows:

  • 3% for income up to $10,000.
  • 4% for income between $10,000 and $25,000.
  • 4.5% for income between $25,000 and $40,000.
  • 6% for income between $40,000 and $60,000.
  • 6.5% for income over $60,000.

Wyoming

Wyoming is one of the few states without any casinos. This means that, by extension, there is no Wyoming state tax on gambling winnings. However, the 24% federal tax is still expected to be paid on any winnings made while gambling in other jurisdictions.

Conclusion – Taxes mostly based on income

Gambling taxes by state can seem tricky at first, but once you realize that most states regard gambling winnings as income, a lot becomes much clearer. You generally have to pay the 24% federal tax, regardless of where you reside.

Many states regard gambling winnings as income, making it easier to understand your tax rate. Now that you’re ready to gamble, fully knowing what you’ll owe the taxman if you win, don’t forget to check out our list of top U.S betting sites. Also, refer to TheGruelingTruth.com for updates on your specific state’s gambling tax rates.

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Gambling Taxes by State FAQ

⚽ Do gambling taxes by state change based on what you wager on

Many users wonder how the kind of gambling they do affects the gambling taxes they owe their state of residence. For example, a player might wonder if the tax rate changes based on whether they play casino games or wager on sports betting New Jersey platforms. Our guides zoom in on the different federal and state tax rates you should expect to pay.

🤝What are the fairest gambling tax rates by state?

US states charge different gambling tax rates based on specific political and economic situations. Many gamblers who may feel that their state taxes are too high may want to wager at casinos and sportsbooks providing lower gambling taxes by state. Numerous states have rock-bottom tax rates on gambling winnings. But as you’ll find in our guides, more factors than just the tax percentage play a role in how much you part with, overall.

🧾 What determines the gambling tax rate by state?

All 28 states on our list have different tax rates on incomes and gambling winnings. Players may, therefore, wonder why different states impose different tax rates on the same activity. History and local sentiment have a lot to do with it, but as you’ll see in our guides, a lot goes into a state’s tax policy.

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