Gambling winnings tax in 2026: what you owe on a win
Every dollar won at a casino, a racetrack, a lottery or a betting app is income for 2026. Here is how it is taxed, and what your losses still offset.
- W-2G threshold 2026
- $2,000
- Federal withholding
- 24 %
- Losses deductible
- 90 % of losses, up to winnings
- Top federal rate
- 37 %
Tax on the 2026 gambling result
$564
Net result $2,000. Under the 2025 rule the federal tax would have been $492; the 90 % limit adds $72.
| Losses deductible in 2026 (90 %, up to winnings) | $5,400 |
| Losses that no longer count | $600 |
| Itemizing beats the standard deduction | yes |
| Federal tax on the gambling | $564 |
| Texas tax on the gambling | $0 |
| Federal tax under the 2025 rule | $492 |
Texas taxes the winnings without the losses in this case. Losses count only for those who itemize; without itemizing, every dollar won is taxed.
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
Gambling winnings are ordinary income on the 2026 federal return, taxed at the same brackets as wages, from 10 % up to 37 %, whether or not the payer sends a Form W-2G. A single filer earning $60,000 who wins $8,000 on slots and has no losses to deduct owes about $1,110 of extra federal tax on that win. Losses only count for those who itemize, and from 2026 only 90 % of them can be deducted, never more than the winnings, under Public Law 119-21. The same player with $6,000 of losses but no other itemized deductions still pays $1,110, because the standard deduction of $16,100 is larger. With $14,000 of mortgage interest and state tax to itemize, the bill falls to $564, against $492 under the 2025 rule. Payers report wins of $2,000 or more, and withhold 24 % on lottery and wagering proceeds above $5,000.
Your 2026 winnings and losses
Tax on the 2026 gambling result
$1,034
| Losses deductible in 2026 (90 %, up to winnings) | $5,400 |
| Losses that no longer count | $600 |
| Itemizing beats the standard deduction | yes |
| Federal tax on the gambling | $1,034 |
Income first, form second
The federal rule is short: all gambling winnings go on the return, "including winnings that aren't reported on a Form W-2G" (IRS Topic no. 419). Cash counts, and so does the fair market value of a car, a cruise or any prize in kind. The amount goes on Schedule 1 of Form 1040 as other income and is added to wages, interest and everything else. Nothing in the tax tables treats it differently: a win simply raises taxable income, and the part of it that falls into a higher bracket is taxed at that bracket's rate.
That is why the same $8,000 win costs different people different amounts. For the single filer in our examples, with $60,000 of other income, taxable income before the win is $43,900; the win carries it past $50,400, so its first dollars are taxed at 12 % and the rest at 22 %. A retiree with little other income would pay less on it; a professional earning $700,000 would pay 37 % on every dollar.
What the payer reports and holds back
Casinos, racetracks, lotteries and sportsbooks issue Form W-2G when a payment reaches the reporting threshold. For payments made in 2026 the IRS sets that minimum at $2,000 (Instructions for Forms W-2G and 5754), up from the old $1,200 for slots and bingo and $1,500 for keno. For lotteries, sports bets and races, the win must also be at least 300 times the wager. Form W-2G in 2026 walks through each box and each game.
Withholding is a separate question. The payer withholds 24 % for the IRS when the proceeds of a lottery, sweepstakes, wagering pool or qualifying bet, meaning the win minus the stake, are more than $5,000. Slot machines, bingo, keno and poker tournaments are not subject to that regular withholding at all; the casino only takes backup withholding of 24 % when the winner does not give a taxpayer number. On a $40,000 lottery prize from a $10 ticket, $9,598 is withheld; the federal tax on that prize for a Texan earning $60,000 is $8,150, so -$1,450 is still due in April. Withholding against the tax due measures that gap for any prize.
Four players, one $8,000 win
The table keeps the win and the salary fixed and changes only the losses and the other deductions. It shows the two conditions that decide whether losses help: itemizing, and the 90 % limit that applies from 2026.
| Situation | Losses allowed | Federal tax on the gambling | Itemizes |
|---|---|---|---|
| No losses | $0 | $1,110 | no |
| $6,000 of losses, nothing else to itemize | $5,400 | $1,110 | no |
| $6,000 of losses, $14,000 of other deductions | $5,400 | $564 | yes |
| Same, under the 2025 rule | $6,000 | $492 | yes |
The second line surprises most players. Losing $6,000 on the way to an $8,000 win leaves a real gain of $2,000, yet the tax is computed on the full win, because the deductible losses plus nothing else stay below the standard deduction. The third line itemizes, and the deduction is $5,400, not $6,000: 90 % of the losses. The page on the 90 % rule shows how that cap turns a break-even year into taxable income.
The state adds its own layer
Most states with an income tax follow the federal figure for winnings and then decide for themselves what to do with losses. Some allow them as an itemized deduction, some only up to the winnings, and a few not at all. The New Jersey resident with the same numbers as the third line pays $144 to the state on top of the federal tax. Winnings from a casino or lottery in another state can also be taxed there as a nonresident, with a credit at home; nonresident tax on lottery prizes lists the rules state by state. Federal withholding on a W-2G does nothing for the state bill, and many casinos withhold no state tax at all.
Records that hold up
Losses are deductible only for a taxpayer who "kept a record of your winnings and losses", in the words of the IRS. A diary with the date, the place, the game and the amounts, backed by tickets, statements from the casino's player card or the account history of a betting app, is what an examiner asks for. Keeping it all year costs little and is the only way the losses reach Schedule A.
The figures on this page are estimates from the 2026 rules, not tax advice for a particular return. Gambling is entertainment that costs money; if it stops being that, the National Problem Gambling Helpline answers at 1-800-MY-RESET, free and confidential (National Council on Problem Gambling).