answer: yes. In the US, all sports betting winnings are taxable income, whether you win $10 or $10,000, and whether or not the sportsbook sends you a tax form. You must report them on your federal tax return, and most states also tax them. Gambling losses can reduce your tax bill, but only if you itemize deductions, and only up to certain limits.
With legal sports betting now available in most states, millions of Americans place bets every year. Far fewer understand how their winnings are taxed. This guide explains how federal and state taxes apply, when sportsbooks report your winnings to the IRS, and how to handle losses.
How Sports Betting Winnings Are Taxed at the Federal Level
All Winnings Count as Taxable Income
The IRS treats gambling winnings, including sports betting, as ordinary income. That means they are added to your other income, such as wages, and taxed at your normal federal income tax rate. There is no special lower rate for gambling winnings.
Winnings include cash prizes and the fair market value of any non-cash prizes. Winnings from bonus bets or free bets that turn into cash are also taxable.
How Much Tax You Pay
Because winnings are taxed as ordinary income, the rate you pay depends on your total income for the year and your tax bracket. Federal income tax rates range from 10% to 37%. A large win can push part of your income into a higher bracket.
You Must Report Winnings Even Without a Tax Form
Many bettors assume winnings are only taxable if the sportsbook sends a tax form. That’s not the case. You are legally required to report all gambling winnings, even small ones. Licensed sportsbooks keep detailed records of your account activity, and you can download a win/loss statement from most of them.
When Sportsbooks Report Your Winnings
Form W-2G
Sportsbooks send Form W-2G to you and the IRS when your winnings on a single bet reach federal reporting thresholds. For sports betting, a W-2G is generally issued when winnings are $600 or more and at least 300 times the amount wagered [verify current threshold, as recent federal law changes may have adjusted reporting thresholds]. In practice, this usually applies to longshot bets and large parlays, rather than standard spread or moneyline bets.
Federal Tax Withholding
If your winnings exceed $5,000 and are at least 300 times your wager, the sportsbook is generally required to withhold 24% for federal income tax [verify current rules]. This withholding is a prepayment, not your final tax bill. You may owe more, or get some back, when you file your return.
How to Report Sports Betting Winnings
Filing Your Federal Return
Gambling winnings are reported on Schedule 1 (Form 1040) as “other income.” Include all winnings for the year, not just those shown on W-2G forms. If tax was withheld, include that amount in your federal tax withheld so you receive credit for it.
Keep Good Records
The IRS expects you to keep an accurate record of your gambling activity. Good records include:
- Dates and types of bets
- The sportsbook or location used
- Amounts wagered, won and lost
- Win/loss statements from each sportsbook
- W-2G forms and bank or e-wallet statements
Most licensed sportsbooks let you download an annual activity statement from your account, which makes record-keeping much easier.
Can You Deduct Sports Betting Losses?
Only If You Itemize
Gambling losses are deductible only if you itemize deductions on Schedule A instead of taking the standard deduction. Because the standard deduction is relatively high, many casual bettors don’t benefit from itemizing, which means their losses provide no tax benefit.
Losses Are Capped
You can’t deduct more in losses than you report in winnings, so you can’t use gambling losses to create a net loss that reduces your other income.
The 90% Rule From 2026
Under federal tax legislation passed in 2025, starting with the 2026 tax year, gambling losses are generally deductible only up to 90% of their amount, still capped at your winnings [verify current status, as there have been proposals in Congress to reverse this change]. This means a bettor who breaks even for the year could still owe tax on part of their winnings.
Example
Say you win $10,000 over the year and lose $10,000. Under the 90% rule, you can deduct up to $9,000 of losses if you itemize, leaving $1,000 of taxable gambling income, even though you didn’t make any money overall.
State Taxes on Sports Betting Winnings
Most States Tax Winnings
In most states with an income tax, gambling winnings are taxed as regular state income. Rates vary widely from state to state. Some states also require sportsbooks to withhold state tax on large wins.
States With No Income Tax
Several states have no personal income tax, which means winnings are not taxed at the state level. These include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Federal tax still applies everywhere.
Betting in Another State
If you win while betting in a state where you don’t live, that state may tax your winnings as a nonresident. Your home state may also tax them, though many states offer a credit for taxes paid to another state to avoid double taxation. A tax professional can help if you bet across state lines.
How Sportsbooks Themselves Are Taxed
Bettors aren’t the only ones paying tax. States tax sportsbook operators on their revenue, with rates varying enormously, from single digits in some states to 51% in New York. Illinois also introduced a per-bet tax on operators in 2025. In addition, a small federal excise tax applies to sports wagers.
These taxes don’t appear on your tax return, but they can affect the odds and promotions sportsbooks offer in each state.
Tips for Bettors at Tax Time
- Track everything from the first bet of the year, not just the big wins.
- Download win/loss statements from every sportsbook you use.
- Set aside money for taxes after big wins, especially if no tax was withheld.
- Don’t assume small wins are tax-free. All winnings are reportable.
- Consider itemizing only if your total itemized deductions exceed the standard deduction.
- Speak to a tax professional if you bet frequently, win large amounts or bet in multiple states.
Frequently Asked Questions
Do I have to pay taxes on sports betting winnings?
Yes. All sports betting winnings are taxable income in the US and must be reported on your federal return, and usually on your state return too.
Do I have to report winnings if I didn’t get a W-2G?
Yes. You must report all gambling winnings, whether or not you receive a W-2G.
How much tax do I pay on sports betting winnings?
Winnings are taxed at your ordinary federal income tax rate, between 10% and 37% depending on your total income, plus any state income tax.
Can I deduct my sports betting losses?
Only if you itemize deductions, and only up to the amount of your winnings. From the 2026 tax year, losses are generally limited to 90% of their value.
Do sportsbooks report winnings to the IRS?
Yes. Sportsbooks report qualifying winnings on Form W-2G, and they keep records of all account activity.
What happens if I don’t report gambling winnings?
Unreported winnings can lead to IRS notices, back taxes, interest and penalties, especially where a W-2G was issued.
Are winnings from bonus bets taxable?
Yes. Winnings from bonus bets or free bets are generally taxable when they become withdrawable cash.
The Bottom Line
Sports betting winnings are taxable in the US, no matter how small. Report all your winnings, keep detailed records, and remember that losses only help if you itemize, and are now limited under federal law. Because tax rules can change and every situation is different, speak to a qualified tax professional or check IRS guidance if you’re unsure.
This article is for general information only and is not tax or legal advice. Tax laws change regularly. Consult a qualified tax professional for advice about your situation. 21+ only. Gambling involves risk. If you or someone you know has a gambling problem, call or text 1-800-GAMBLER.