Gambling Taxes State by State 2021

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.

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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?

Gambling winnings

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.

Gambling losses

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.

Gambling records

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.

Gambling professionally

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.

Current state-by-state gambling taxes in the USA

Western states

California

  • 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

  • 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

  • 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

  • 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

  • Idaho does not charge a gambling tax rate by state
  • Idaho charges the federal gambling winnings state tax of 24%

Washington

  • 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

  • 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

  • Utah actually is one of two states with no legal gambling at all
  • It charges 5% tax on boxing promoters, under their ‘gambling’ law

Nevada

  • 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

  • Alaska has no gambling winning state taxes on gambling winnings
  • You are liable to pay the federal tax of 24%

Hawaii

  • 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

Southwest

Texas

  • 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

  • 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

  • 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

Arizona

  • The Arizona gambling winning state taxes range from 2.59% to 4.5%
  • Any winnings under $26,500 remain at 2.59%

Midwest

Ohio

  • Ohio has gambling taxes by state of 4% on all gambling activities

Indiana

  • Indiana has a gambling winnings state taxes of 3.23%
  • It is also subject to the federal rate of 34%

Michigan

  • Michigan charges a gambling winnings state taxes of 4.25%
  • The federal tax rate also applies in Michigan

Illinois

  • Illinois charges an income tax only if your winnings cross a $600 threshold
  • The income tax remains at a high 15%

Missouri

  • If winnings come to more than $601, then Missouri is entitled to tax it
  • Missouri charges a gambling winnings state taxes of 4%

Wisconsin

  • 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

  • Minnesota does not have a gambling winnings state tax
  • You must play the flat federal rate of 24%

Iowa

  • Iowa has a withholding rate of 5% for gambling taxes by state, along with the federal 24% rate

Kansas

  • 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

  • Nebraska only recently legalized casino gambling in 2020
  • 20% of the adjusted revenue is used as a gambling winning state tax excise

South Dakota

  • 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

  • North Dakota only charges charity casinos for tax at 1%
  • North Dakota has no gambling winning state taxes, it only charges the federal rate

Southeast

West Virginia

  • West Virginia charges gambling winning state taxes of 5.5% on all winnings

Virginia

  • Virginia gambling tax by state ranges from 2% to 5.75%
  • Any winnings under $3,000 are subject to the lowest of 2%

Kentucky

  • Kentucky withholds a sizable 6% from all lottery and casino gambling winnings, including all prizes

Tennessee

  • Tennessee has no state earned income tax
  • You are charged the federal income tax rate of 24%

North Carolina

  • 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

  • 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

  • Georgia residents and nonresidents pay a gambling tax by state of 6%, along with the federal tax rate of 24%

Alabama

  • 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

Mississippi

  • 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

  • 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

Louisiana

  • 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%

Florida

  • 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)

Northeast

Maine

  • 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

Massachusetts

  • 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

  • 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

Connecticut

  • 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

  • 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

Vermont

  • 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

  • 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

  • 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

New Jersey

  • The gambling winnings state tax in New Jersey is only 3%
  • This is the lowest fixed tax rate across all of the states

Delaware

  • 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

Maryland

  • 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!

Alaska

Legal online gambling in Alaska:

Arkansas

Legal online gambling in Arkansas:

Arizona

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California

Legal online gambling in California:

Colorado

Legal online gambling in Colorado:

Connecticut

Legal online gambling in Connecticut:

Delaware

Legal online gambling in Delaware:

Florida

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Idaho

Legal online gambling in Idaho:

Illinois

Legal online gambling in Illinois:

Indiana

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Iowa

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Kansas

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Kentucky

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Louisiana

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Maine

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Maryland

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Massachusetts

Legal online gambling in Massachusetts:

Michigan

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Minnesota

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Missouri

Legal online gambling in Missouri:

Montana
Nebraska

Legal online gambling in Nebraska:

Nevada

Legal online gambling in Nevada:

New Hampshire

Legal online gambling in New Hampshire:

New Jersey

Legal online gambling in New Jersey:

New Mexico

Legal online gambling in New Mexico:

New York

Legal online gambling in New York:

North Carolina
North Dakota

Legal online gambling in North Dakota:

Ohio

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Oklahoma

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Oregon

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Pennsylvania

Legal online gambling in Pennsylvania:

Rhode Island

Legal online gambling in Rhode Island:

South Carolina
South Dakota

Legal online gambling in South Dakota:

Tennessee

Legal online gambling in Tennessee:

Vermont

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Virginia

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Washington

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West Virginia

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Wisconsin

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Wyoming

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Gambling Taxes State by State FAQ

💸 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.

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