"Matthew’s journey to Las Vegas was a short one, given he was born in the city to a family who traced their roots back to the earliest settlement of the area. Initially, his focus was on moving elsewhere: while many pine for the wonders of Las Vegas, he sought to broaden his horizons.
Moving to NYC to study Journalism at NYU, Matthew initially thought Vegas would shift from his everyday reality to his hometown he only visited for Thanksgiving. But it didn’t take long for a hankering for home to arrive: as much as he loved the East Coast and everything it offered, by the time he graduated, the pull he had felt to leave Vegas seemed to be working in the opposite direction.
An initial return to live with his parents following graduation soon became permanent, as he started to write for local newsletters in the city and soon found his own home. Revelling in the weather, and seeing his home city through new, appreciative eyes, he sought to strengthen his expertise on poker, Blackjack, and roulette in his spare time. As his writing portfolio grew, he soon began to write about his hobby subjects too — and a vocation was born.
Ten years after he returned for a “short stay” after receiving his degree, Matthew is now firmly enmeshed in all things Vegas, and can’t ever see himself leaving again. With Las Vegas How To, he is able to combine his passion for writing with his love for Vegas, his rich history of gambling, and his homegrown expertise at the Blackjack, poker, and roulette tables."
We at LasVegas-How-To understand that taxes can really blindside any bettor. Gambling taxes by state can be confusing for most people, as different states have such different regulations and casino payouts by state also vary considerably. We’re here to clear that up.
We want to make it clear 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. The reason for this is that it is considered fair market value for the income you receive. For those states that allow gambling, gambling taxes by 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 state?
Do casino payouts by state tend to differ? Generally, all gambling winnings are subject to a 24% flat rate. You pay this on a yearly basis, in April at the end of every tax return year. However, if your winnings are over $5,000, you may have to do a little more work. In addition, some states that allow casinos will charge a higher tax rate on winnings than for 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 gambling 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 amount of gambling winnings state taxes.
Presenting the W-2G to the state in your tax returns means you’ll have to retain 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 yourself a lot of hassle with gambling taxes by state. If you gamble for a living, then the state will officially recognize gambling as your occupation. So, you’ll just be taxed at your normal income tax rate.
California is one of the most colorful states for gambling but has some of the largest gambling taxes by state across the country
California taxes gambling winnings as normal income, which is substantially more than most other states in the West and across the entire country
The gambling winnings state taxes anywhere from 1% to 13.3% of your winnings
They also have a flat excise rate of 10%
California residents should be wary because these taxes are much higher than what other states charge their residents
Montana recently updated their legislation on gambling taxes in 2014
15% of your gross income from per ‘video gambling machine’, which essentially means slots
$1 is charged on every 100 sports tabs sold
1% of your gross income is charged on bingo and keno
Colorado has a flat-rate tax of 4.63% for most gamblers
This gambling tax by state depends on the type of gambling – for example, the gambling winnings state taxes 10% on sportsbooks winnings
Colorado is considered on the lower end of the scale with gambling tax by state – with most taxes remaining at the flat rate of 4.63%
Wyoming charges a 10% tax on all sports betting winnings
The gambling winnings state taxes nothing on casinos, as there are no legal land-based casinos based in Wyoming
Idaho does not charge a gambling tax rate by state
Idaho charges the federal gambling winnings state tax of 24%
Washington does not charge any gambling winnings state tax
Washington instead allows local communities to tax gambling receipts
Cardrooms make up 20% of the receipt tax, while bingo, slots, and raffles count for 5%
Oregon doesn’t tax winnings that amount to under $600
The federal tax of 24% is still in play
Anything over $1,500 are subject to gambling winning state taxes of 8%
Utah actually is one of two states with no legal gambling at all
It charges 5% tax on boxing promoters, under their ‘gambling’ law
The tax rate for Nevada is generally higher due to the sheer amount of gambling
Winnings over $5,000 have a gambling tax rate by state of 25%
Alaska has no gambling winning state taxes on gambling winnings
You are liable to pay the federal tax of 24%
Hawaii is the second state that has no legal gambling at all
It charges a 4% tax on professional gamblers, the only legal gamblers allowed in the state
Texas has a gambling winnings state taxes of 3% on all prizes won across all forms of gambling
You’re also subject to the federal gambling rate of 24%
Oklahoma has a gambling winnings state taxes of 3% also, but only on winnings over $1,000
All winnings are subject to federal gambling rates of 24%
New Mexico has a strict gambling tax by rate
They charge 9% on all kinds of gambling games legal in the state, including casino and sports betting
The Arizona gambling winning state taxes range from 2.59% to 4.5%
Any winnings under $26,500 remain at 2.59%
Ohio has gambling taxes by state of 4% on all gambling activities
Indiana has a gambling winnings state taxes of 3.23%
It is also subject to the federal rate of 34%
Michigan charges a gambling winnings state taxes of 4.25%
The federal tax rate also applies in Michigan
Illinois charges an income tax only if your winnings cross a $600 threshold
The income tax remains at a high 15%
If winnings come to more than $601, then Missouri is entitled to tax it
Missouri charges a gambling winnings state taxes of 4%
Wisconsin requires you to see a W-2G in order to tax your gambling income
The starting set gambling tax rate by state is 7.65%
Minnesota does not have a gambling winnings state tax
You must play the flat federal rate of 24%
Iowa has a withholding rate of 5% for gambling taxes by state, along with the federal 24% rate
For amounts less than $5,000, Kansas does not charge a gambling winning state tax
Over $5,000 is subject to a 5% rate for gambling taxes by state
Nebraska only recently legalized casino gambling in 2020
20% of the adjusted revenue is used as a gambling winning state tax excise
South Dakota does not have an income tax for gambling taxes by state
Any gambling winnings over $600 are subject to the federal rate of 24%
North Dakota only charges charity casinos for tax at 1%
North Dakota has no gambling winning state taxes, it only charges the federal rate
Check out our recommended gambling sites
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 winnings amount 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 have 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 a 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 amount of earnings, etc.
It’s always important to just 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 tax rate you should go by when you’re looking at taxing your gambling winnings. It completely changes from 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 – you have knowledge.
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. There is a fixed federal rate you’ll have to pay 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, and those state taxes really hold all the power on how you pay them depending on what state you’re in. 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 are gambling losses. Gambling losses are tax-deductible and can be put down in your tax reports as a way 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.
Players must be 21 years of age or older or reach the minimum age for gambling in their respective state and located in jurisdictions where online gambling is legal. Please play responsibly. Bet with your head, not over it. If you or someone you know has a gambling problem, and wants help, call or visit: (a) the Council on Compulsive Gambling of New Jersey at 1-800-Gambler or www.800gambler.org; or (b) Gamblers Anonymous at 855-2-CALL-GA or www.gamblersanonymous.org.
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