Don't Get Fooled! Casino Taxes State by State 2023
LV native and table games whizz
LV native and table games whizz
We at LasVegas-How-To understand that taxes can blindside any bettor. Casino taxes by state can be confusing for most people, as different states have different regulations, and casino payouts by the state also vary considerably. We’re here to clear that up.
We want to clarify for any bettor, whether you’re from New York or Arizona, exactly what taxes you should expect from state to state. Unexpected and hefty taxes shouldn’t ruin your gambling experience, and the gambling tax rate by state varies so much it needs to be clarified clearly for everyone.
Gambling taxes overview – What to expect, and the general concepts
Overview of taxing gambling
Gambling income will always be taxable income. This is because it is considered fair market value for the income you receive. For those states that allow gambling, gambling taxes by the state include but are not limited to Casino games, Slot machines, Keno, Poker tournaments, Lotteries, Sweepstakes, Raffles, Betting pools, Gameshows, Horse racing, track betting, and bingo. With that covering almost all forms of online gambling: how do I pay gambling taxes by the state?
Do casino payouts by state tend to differ? Generally, all gambling winnings are subject to a 24% flat rate. You pay this yearly, in April at the end of every tax return year. However, if your winnings are over $5,000, you may have to do more work. In addition, some states that allow casinos will charge a higher tax rate on winnings than other forms of gambling.
You’d have to submit a form called the W-2G. The form W-2G for Certain Gambling Winnings calculates how much tax you will have to pay on big gambling winnings, and the state will withhold the tax they deem necessary for the winnings.
The first upside to all these casino taxes by state, though, is your gambling losses. Finally, they may serve some purpose as a tax relief of sorts. You’ll have to report both gambling losses and winnings separately, but your losses can offset the number of gambling winnings state taxes.
Presenting the W-2G to the state in your tax returns means retaining records of your gambling activity. Receipts, payment slips, statements, and the name of the gambling event or the establishment you would gamble at.
However, if you are a professional gambler, you can save a lot of hassle with gambling taxes by state. If you gamble for a living, the state will officially recognize gambling as your occupation. So, you’ll just be taxed at your normal income tax rate.
West Virginia charges gambling winning state taxes of 5.5% on all winnings
Virginia gambling tax by state ranges from 2% to 5.75%
Any winnings under $3,000 are subject to the lowest of 2%
Kentucky withholds a sizable 6% from all lottery and casino gambling winnings, including all prizes
Tennessee has no state earned income tax
You are charged the federal income tax rate of 24%
North Carolina residents have to pay a gambling tax by state of 4% on all gambling winnings.
This includes a professional gambling rate
South Carolina residents pay a gambling tax by state that ranges from 0% to 7%
Once your winnings reach $3,100, you are subject to tax
Georgia residents and nonresidents pay a gambling tax by state of 6%, along with the federal tax rate of 24%
Alabama is subject to a gambling winnings state tax of 2-5% depending on your winnings
Once you reach $500, you have to pay 2% on your winnings
Gambling winnings state tax of 3% on all gambling winnings in Mississippi
This is a non-refundable income tax, that the casinos themselves withhold
Arkansas gambling taxes by state levy a tax of 3% on all single payments from your gambling winnings, that over $1,200
Any winnings under that amount aren’t subject to a state tax, but still the federal tax
Casino games are subject to different gambling winnings state taxes in Louisiana depending on where you gained your winnings
If your winnings were land-based, you’re subject to a 10%, and if they were gained online, you’re subject to 15%
Casino winnings in Florida are taxed at the federal rate of 24% if the amount of the winning to over $5,000 cumulatively over the year
Sports betting, however, is subject to a gambling winnings state tax of 13.75% of the adjusted revenue (winnings after tax has already been deducted)
The Main State Lottery (which oversees all gambling activity) will withhold a gambling winnings state tax of 5% on all gambling winnings.
The federal rate of 24% will apply first
Any winnings over $600 are subject to a gambling winnings state tax of 5% in Massachusetts.
If you are above the $5,000 range, you’ll also pay the federal tax rate
Rhode Island has an oddly high gambling winnings state tax of 51% on all gambling winnings revenue.
This is part of a ‘revenue sharing model’ Rhode Island has with Delaware, where revenue is shared between state, casinos, and operators
The Connecticut Lottery law states that they withhold gambling winnings state tax of 6.99% on all gambling winnings over $600
Any winnings that are possibly subject to federal tax will also be subject to the state tax
New Hampshire also has another strangely high tax rate, of 51% of gross revenue for online bets, and 50% on in-person bets on casinos within the state borders.
This is because they have granted a government exclusive monopoly to DraftKings, essentially making it the only legitimate gambling organization in the state
The Vermont state has a gambling tax by state of 6% on all gambling winnings above $600
If you provide a legitimate TIN (Taxpayer Identification Number) then you may not be liable to the state tax
New York is also a state that provides different gambling winnings state taxes depending on the conditions.
You pay 8.5% on land-based revenue and 13% on all online revenue
Pennsylvania charge a flat rate on their gambling winnings state tax of 3.07%
Based on if your tax is above $5,000, you may have to pay up to 35% in federal tax
The gambling winnings state tax in New Jersey is only 3%
This is the lowest fixed tax rate across all of the states
The gambling tax by state in Delaware is 43%, or 50% on gross revenue
This is part of a ‘revenue sharing model’ Delaware have with Rhode Island, where revenue is shared between state, casino, and operators
Taxes on any winnings over $600 are subject to an 8.75% tax in Maryland
Non-residents in Maryland are also subject to a 7%
We provided the basic overview, and obviously, we have not included states where gambling is illegal, but always remember that laws at a state level are constantly changing in terms of gambling. Some states that have just legalized gambling, like Nebraska, may decide to lower or raise their gambling tax based on how many people are gambling, the number of earnings, etc.
It’s always important to note that while this information is accurate as of 2021, that the law is an ever-changing beast. Be cautious that your state laws could be liable to be changed at any time based on any gambling factors within your state.
Conclusion – A wide range of taxes, but a wider range of opportunities
To wrap up, the federal tax rate isn’t the standard one you should go by when taxing your gambling winnings. It completely changes casino taxes by state to state, and you may be leaving with more winnings in some states rather than others.
For example, the Northern states such as New Jersey, Pennsylvania, and Indiana would be subject to lower gambling winnings state taxes. However, southern states such as Louisiana, Florida, and South Carolina are subject to much higher taxes. But, now you have a necessary leg up that all gamblers would love to have.
Check out which type of online gambling your state allows!
💸 How much tax do you pay on gambling winnings in USA?
Simply put, this depends on where you live. You’ll have to pay a fixed federal rate if your winnings are high enough, but this is only for the biggest winnings. In most cases, winnings will be subject to a state tax that will completely vary depending on where you live. The tax is often part of the state’s individual income tax. Due to most states considering gambling winnings as income, you’ll have to pay the standard income tax depending on how much you made and what the flat tax rate will be.
💵 How much can you win at casinos without paying taxes?
You can win anywhere from three figures to four figures depending on your circumstances, without paying taxes. You always have to consider that there are state taxes, which really hold all the power on how you pay them depending on your state. Another aspect you have to consider is that online casinos may have different tax rates than real person casinos, and states with legal online poker may tax those winnings at a higher rate. In most cases, you’ll have to pay more tax on online winnings than you would real person winnings.
💲 How do I prove gambling losses?
Another aspect that you can put towards your taxes is gambling losses. Gambling losses are tax-deductible and can be put down in your tax reports to offset your gambling winnings state taxes. You have to report large enough gambling winnings to the W-2G- the taxing form for gambling winnings that you submit to different states so they can calculate how much tax they can withhold from your winnings. Your gambling losses will be considered in your W-2G, and if your winnings are large enough, your losses will certainly make a difference on your taxes.
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