What Is the Tax Rate on Gambling Winnings: Federal, State, and W-2G

Gambling winnings are taxed as ordinary federal income, meaning the tax rate on gambling winnings is whatever bracket your total income lands in for the year — between 10% and 37% for 2026.¹ There is no separate “gambling tax.” Your winnings from casinos, sports books, lotteries, poker rooms, and any other wager get added to your wages and other earnings, and the combined total drives your rate. Casinos and other payers usually withhold 24% at the moment of payout on larger wins, and most states take a cut on top of that.

Federal Brackets Set Your Actual Rate

The IRS treats gambling income the same as wages or self-employment income under 26 USC 61.² When you file, the winnings sit on top of everything else you earned, and the graduated brackets under 26 USC 1 apply to the combined figure.³

For tax year 2026, single filers pay:⁴

10% on taxable income up to $12,400
12% from $12,401 to $50,400
22% from $50,401 to $105,700
24% from $105,701 to $201,775
32% from $201,776 to $256,225
35% from $256,226 to $640,600
37% above $640,600

Married couples filing jointly get wider brackets. The 37% rate for joint filers, for example, only starts above $768,700.⁴

A big win can push part of your income into a higher bracket, but only the dollars inside that bracket get taxed at the higher rate. If you earn $45,000 from a job and win $20,000 at a casino, your $65,000 total straddles the 12% and 22% brackets. Nothing you already earned gets retroactively taxed at 22%.

The 24% Withheld at the Casino Is Not Your Final Tax

Casinos and other payers must hold back 24% federal tax before paying you in certain situations. The withholding applies to winnings of $5,000 or more from lotteries, sweepstakes, wagering pools, sports bets, and some parimutuel wagers.⁵ For other wagers, the 24% applies when winnings top $5,000 and are also at least 300 times the amount you bet.⁶

Bingo, keno, and slot machine winnings are exempt from this regular withholding no matter how much you win. The money is still taxable; the payer just is not required to skim 24% off the top. If you refuse to give the payer a Social Security number when one is required, backup withholding kicks in at 24%, including on bingo, keno, and slot payouts that would otherwise be exempt.⁵

Whatever the payer takes is a prepayment, not a settled tax. If your bracket runs higher than 24%, you owe more at filing. If it runs lower, the extra comes back as a refund.

Form W-2G and Reporting Winnings

Payers report gambling winnings to the IRS on Form W-2G.⁷ The thresholds that trigger a W-2G are separate from the withholding rules and usually kick in at lower amounts. For payments made in 2026, the minimum reporting threshold is $2,000, with variations by game type: bingo and slot payouts count once they reach the threshold; keno counts after subtracting the wager; poker tournaments count after subtracting the buy-in; sports bets and similar wagers only trigger a W-2G if they also hit 300 times the bet.⁵

A W-2G lists your Social Security number, the amount won, the date, and any tax withheld. Copies go to you, the IRS, and your state tax department when required.⁵

Not getting a W-2G does not make winnings tax-free. Every dollar you won is reportable, including small online bets, casual sports wagers with friends, and any session you finished ahead. Casual gamblers put winnings on Schedule 1 of Form 1040 as other income.⁸

Deducting Losses Can Lower Your Effective Rate

You can deduct gambling losses, but only up to the amount of gambling winnings you reported. Losses cannot create a net deduction against other income.¹ Win $8,000, lose $12,000, and the deductible loss stops at $8,000.

The deduction only helps if you itemize on Schedule A instead of taking the standard deduction. For 2026, the standard deduction is $16,100 for single filers, $32,200 for joint filers, and $24,150 for heads of household.⁴ If your losses plus other itemized deductions like mortgage interest and state taxes do not clear that threshold, itemizing costs you money.

The IRS expects a detailed diary: date and type of each wager, name and location of the establishment, and amounts won or lost, backed by tickets, receipts, and casino statements.¹ Without records, the loss deduction can be disallowed.

Estimated Payments After a Large Win

When 24% withholding does not cover your real bracket, or when the win came from a source that does not withhold at all (like a slot jackpot), you may need to make an estimated payment to avoid an underpayment penalty. Federal tax is pay-as-you-go.⁹

Quarterly due dates are April 15, June 15, September 15, and January 15 of the following year. Paying at least 90% of your total tax during the year through withholding and estimates keeps you clear of the penalty.⁹ Use Form 1040-ES to work out the amount. Do not sit on a big early-year win until the following April.

State Tax Adds to the Federal Bill

Most states tax gambling winnings as regular income. Rates vary widely: among states that tax at all, the effective rate runs from roughly 3% to nearly 11%. Some states, including those without a personal income tax, do not tax winnings separately.

Many states also require payers to withhold state tax above a threshold, and those thresholds differ. Win in a state where you do not live, and you may owe tax to both. Most states let you claim a credit on your resident return for tax paid to the other state, avoiding true double taxation. Your home state’s tax agency has the exact rate, withholding rule, and credit mechanics.

Nonresident Aliens Pay a Flat 30%

If you are not a U.S. citizen or resident alien, U.S. gambling winnings are generally taxed at a flat 30%, withheld at the source under 26 USC 871.¹⁰ The payer takes it before the payout, and you usually do not need to file a U.S. return just for winnings that were fully withheld.

Five table games are exempt from the 30% tax: blackjack, baccarat, craps, roulette, and big-6 wheel.¹⁰ Slots, poker, sports bets, and everything else stay subject to the full rate.

Tax treaties with the United Kingdom, France, Germany, Japan, Italy, Spain, and more than a dozen other countries can reduce or eliminate the 30%. Residents of Malta face a reduced rate of 10%. To claim a treaty benefit, give the payer a completed Form W-8BEN before payment.¹¹ Payers report the income on Form 1042-S (income code 28) rather than a W-2G.¹² If the full 30% was withheld and a treaty applies, you can file Form 1040-NR to claim a refund.¹ Nonresident aliens who are not Canadian residents generally cannot deduct gambling losses.

Professional Gamblers Follow a Different Regime

The rates and rules above apply to casual gamblers. If you gamble as a trade or business, the IRS may treat you as a professional, in which case winnings and losses go on Schedule C rather than Schedule 1. You can deduct ordinary business expenses like travel and research along with losses, but your net gambling income becomes subject to self-employment tax (6.2% Social Security and 1.45% Medicare) on top of income tax. Classification turns on factors like the time you put in, whether you rely on gambling for income, and how businesslike your approach is.¹

1
Internal Revenue Service. Topic No. 419, Gambling Income and Losses
2
Office of the Law Revision Counsel. 26 USC 61 – Gross Income Defined
3
Office of the Law Revision Counsel. 26 USC 1 – Tax Imposed
4
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
5
Internal Revenue Service. Instructions for Forms W-2G and 5754
6
Office of the Law Revision Counsel. 26 USC 3402 – Income Tax Collected at Source
7
Internal Revenue Service. About Form W-2G, Certain Gambling Winnings
8
Internal Revenue Service. Five Important Tips on Gambling Income and Losses
9
Internal Revenue Service. Pay As You Go, So You Won’t Owe: A Guide to Withholding, Estimated Taxes and Ways to Avoid the Estimated Tax Penalty
10
Office of the Law Revision Counsel. 26 USC 871 – Tax on Nonresident Alien Individuals
11
Internal Revenue Service. Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
12
Internal Revenue Service. Instructions for Form 1042-S