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- Gambling taxes overview
- State vs federal tax
The taxes casinos pay to states can be confusing, as every state has regulations. Compounding this confusion is that casino payouts also differ from state to state. Our guide will show you the general tax information that applies to anybody who wins money while gambling in the United States. Gambling winnings in the United States are subject to taxation, which may occur at the federal, state, and local levels. This differs from gambling regulations in other countries, such as the UK. Also, online gambling is taxable. To play at the licensed, regulated sites, check this detail guide here to know the legal gambling sites in the US.
Therefore, if you become prosperous even while gambling on the strip, you mustn’t forget that some money won’t come home with you. Here is a guide about gambling taxes in the US.
Gambling taxes overview
It’s important for anyone who wants to gamble legally to know the gambling tax rates in their state. Gambling always comes with the risk of losing money, but if you get lucky and win big, ensure you’re prepared to pay up to your state and federal taxes. Even if you only win a small amount, your prize money may still have to be included in your annual tax return.
State vs federal tax
Before we discuss the tax rates on gambling by state, it’s crucial to understand how your winnings influence the federal taxes you owe. If you win more than
- For racetrack: $600
- For slots or bingo: $1,200
- For keno: $1,500
- For poker: $5,000
You must report any winnings on a W2-G form. They will immediately deduct 24% of your winnings if you win at the casino or sportsbook. The amount of money you may owe or get back from the government depends on various elements. You don’t have to use a W2-G form for winnings from table games such as blackjack, baccarat, craps, or roulette; however, you must still report them. Depending on your location, you may have to pay these local taxes in addition to the federal tax.
The amount of taxes you pay on gambling winnings in Arizona is determined by your total annual winnings. The gambling tax rates in the state can be:
- The lowest end consists of people who make 0 to $26,501 annually and are taxed at 2.59%.
- If you make $159,000 or more annually, you’re in the 4.50% tax bracket.
So, add your winnings to your expected income and pay the standard percentage.
Arkansas’s gambling tax is based on a person’s annual taxable income, as stated by the state Gaming Association. This means that you could be charged:
- 2.0% at the lowest end ($5 000 – $9,999).
- 5.5% at the highest end ($84,500+).
The California state tax on gambling winnings is like other gambling taxes by the state in that it gets taken out of your income taxes. You may be charged:
- 1.0% at the lowest end (0 – $8,809).
- 13.3% at the highest end ($1,000 000+).
Like many other taxes, the state tax you pay on gambling winnings is based on your annual income. Colorado’s individual taxation is flat, meaning you don’t have to pay more based on how much money you’ve won. So no matter the amount, you’d only be paying the following:
- 4.63% of your total income
Like Colorado, Connecticut also imposes a flat income tax on all gambling winnings. According to state law, the CT Lottery is required to charge a rate of:
- A 6.99% tax on gambling winnings.
All gambling winnings that must be reported for federal taxes or are subject to federal tax will have this state gambling tax rate applied.
Gambling winnings in Delaware are taxed at the same rate as income. Delaware residents who gamble might have to pay the state’s income tax, which is graduated.
- If your winnings are $60,000 or less, you will be taxed at a rate of 2.2%-5.5%.
- If you make more than $60,000, you will be taxed at 6.6%.
The Illinois state tax rate for gambling winnings is the same as if it were annual income. In many states, Illinois included tax gambling winnings as personal income. Illinois will only require you to pay a flat gambling tax rate.
- A 4.95% flat rate, no matter how much you win.
Indiana has one of the lowest flat-income tax rates in the nation. The Indiana state tax gambling winnings is much lower than most states:
- A 3.23% commission is taken from all winnings.
This makes Indiana one of the most gambling-friendly states on our list regarding taxes.
The Iowa state tax on gambling winnings is very fair, given that the state has a vivacious gambling culture fostered by the presence of several popular casinos, poker rooms, and bookmakers. The following are the expected costs:
- The Hawkeye state has a 5% flat tax on all gambling winnings.
While this state’s gambling tax rate isn’t the best, it can still be considered fair.
Gambling winnings in Louisiana are considered personal income. The Louisiana state tax on gambling winnings is as follows:
- 6% of the total winnings will be withheld under federal law.
Maryland has a high state tax on gambling winnings compared to other states. Although Maryland has progressive tax rates, residents are subject to a flat rate of:
- The government taxes 8.75% of all gambling winnings.
For 20 years, the state tax on gambling winnings in Massachusetts (the income tax rate) stayed at 5.05%. In 2019, however, it spiked to 5%.
If you earn less than $8,000 a year, you aren’t required to file a state income tax return.
As of October 1, 2012, Michigan state tax on gambling winnings has been at a constant rate of 4,25% for all gambling winnings.
The rate specified above applies even if the amount won is less than the reportable IRS amount, which goes for any funds. Lucky winners receive from casinos, race tracks, or charitable gambling platforms.
In contrast to every other state, gambling winnings are not taxed as income in Mississippi. Even though the state does not ban gambling, it still taxes gamblers. The Mississippi state tax rate for gambling winnings is set relatively low:
- Non-refundable withholding tax: 3%.
Mississippi has some of the lowest gambling taxes rates in the nation.
The state lottery and sports wagering commission have set Montana state tax on gambling winnings at a flat rate of:
- The amount to be deducted and withheld is 6.9%.
Although this rate is not super low, it can be seen as fair when compared to other states’ taxes, which can get up to 8% or higher.
Nebraska imposes a state tax on gambling winnings that is equivalent to the income tax rate. On average, residents of this state can expect to pay the following:
- If you win up to $3,340, you will pay 2.46%.
- If you make more than $32,210, then your tax bracket will be 6.84%.
Although Nevada is famous for its expansive gambling opportunities in Las Vegas, the state taxes on gambling winnings aren’t meagre for residents. Depending on the state income tax, you could pay the following:
- If you win $50,000 or less, 3.5% will be taken out.
- 4.5% tax rate if your winnings are between $50,000 and $134,000.
- The 6.75% tax bracket applies to income over $134,000.
Gambling residents of New Hampshire will be overjoyed to find out there is no state tax on gambling winnings. The 10% state gambling tax was instated in 2009 but only lasted until 2011. Back then, the only gambling options were betting on horse races and playing the lottery.
New Jersey has rapidly become one of America’s most prominent gambling hubs in recent years. The growing number of gambling options in this state reflects the increasing popularity of gambling. This is also reflected in the New Jersey state tax on gambling winnings. All individuals, regardless of residency, are expected to pay:
- A 3% tax is levied on gambling payouts.
Over the past decade, gambling has exploded in New York State. The main source of this growth has been new legislation, such as the Expanded Gaming Act, which commercialized gambling by allowing for the opening of casinos on top of pre-existing native establishments. The NY state gambling tax rate can be found below:
- The lower end is at 4%.
- 8.82% is on the high end.
The income tax rate in North Carolina is always changing, with new figures being announced regularly. As gambling winnings in North Carolina are considered income, the state tax on gambling payouts fluctuates. According to the current gambling tax plan for 2022:
- 4.99%, but it is subject to change in the coming year.
The current Ohio state tax rate on gambling winnings is quite fair at 4% for any and all winnings that are reportable to the IRS.
The state of Oregon has a surprisingly low tax on gambling winnings, given the state’s love of charity gaming, lotteries, tribal casinos, and horse racing. However, the state levies:
- An 8% tax on all winnings exceeding $600.
The good news is that gambling winnings under $600 are not taxed.
3.07% of all gambling income is taxed by the state of Pennsylvania and any other state taxes on income.
All forms of gambling, including sports betting and casino gaming in Pennsylvania, must be reported on the PA-40 Schedule T.
The rate of Rhode Island state tax imposed on gambling winnings generally decreases as your overall annual income increases, with the lowest being set at
- 3.75% for any amount up to $65,250.
- You’ll be taxed 4.75% for earnings between $65,250 and $148,350.
- Those who earn more than $148,350 will have to pay 5.99%.
The Virginia gambling tax is more complex than in other states. If you win, you must fill out a form and pay the taxes on your earnings.
- If you win $3,000 or less, your tax percentage will be 2%.
- 3% commission plus a fee of $60 for earnings between $3,000 and $5,000.
- If you win between $5,000 and $17,000, you will receive 5% + $120.
- If you bring in more than $17,000 annually, you will be taxed 5.75% plus an additional $720.
West Virginia’s state tax rates for gambling winnings vary depending on your annual income. The following outlines the rates:
- 3% for any income up to $10,000.
- 4% tax on income between $10,000 and $25,000.
- 4.5% tax on income between $25,000 and $40,000.
- Income earners between $40,000 and 60,000 pay 6% in taxes.
- 6.5% tax on all income earned over $60,000.
Although gambling is popular, Wyoming is one of the few states that do not casinos. This means that Wyoming does not tax gambling winnings. All gambling winnings are subject to a 24% federal tax, regardless of where the winning occurred.
Gambling is a popular pastime in many states, and each has unique tax laws governing gambling winnings. Some states have lower rates than others, while some high levy taxes on winnings of all sizes. The lower your annual income, the lower your state tax rate on gambling earnings will be. However, there are also variations within individual income brackets, so it is essential to be aware of any changes in state tax law that could affect you. Whether you play at casinos, please bet on sports matches, or participate in lotteries and raffles, it is essential to familiarize yourself with your state’s tax laws and report all gambling earnings accurately.