Gambling & Lottery Tax Calculator: Estimate Your Federal & State Tax

How Gambling Winnings Are Taxed in the US

All gambling winnings are fully taxable as ordinary income under federal law — whether from the lottery, casino slots, sports betting, poker tournaments, or online gambling. The IRS requires you to report every dollar won, even if no W-2G form is issued.

For 2026, the One Big Beautiful Bill Act (OBBBA) changed two important rules:

• Gambling loss deductions are now capped at 90% of your winnings (down from 100%). This means you can owe tax even if you broke even — the so-called "phantom income" problem.

• The W-2G reporting threshold increased to $2,000 (up from the prior $600–$1,500 depending on gambling type), adjusted annually for inflation going forward.

Use the calculator above to estimate your federal and state tax burden based on your specific situation.

What This Calculator Covers

• All gambling types: lottery, casino (slots and table games), sports betting, poker, and other gambling

• Federal tax: calculated using the 2026 tax brackets (per IRS Rev. Proc. 2025-32)

• State tax: all 50 states plus Washington DC, with no-income-tax states clearly labeled

• OBBBA loss cap: the new 90% limitation on gambling loss deductions

• W-2G check: whether your winnings would trigger a W-2G reporting form

• Withholding indicator: whether the 24% federal withholding rate applies

Important Limitations

This calculator provides estimates only. It uses simplified assumptions:

• State tax is calculated using top marginal rates for states with graduated brackets. Your actual state tax may be lower if your income falls in a lower bracket.

• Local and municipal taxes (such as NYC's ~3.9% city tax) are not included.

• The calculator does not account for tax credits, AMT, or other deductions beyond gambling losses.

• Professional gamblers who report on Schedule C have different rules — this tool assumes recreational gambling.

Always consult a qualified tax professional for advice specific to your situation, especially for large winnings or complex scenarios.

Frequently Asked Questions

Do I have to pay taxes on gambling winnings?

Yes. All gambling winnings are taxable as ordinary income under federal law. This includes lottery prizes, casino winnings, sports bets, poker tournaments, and online gambling — even if you don't receive a W-2G form.

What changed with the OBBBA in 2026?

The One Big Beautiful Bill Act made two key changes: (1) gambling loss deductions are now capped at 90% of winnings instead of 100%, and (2) the W-2G reporting threshold was raised to $2,000 and will be adjusted for inflation annually.

What is "phantom income" from gambling?

Under the new 90% loss cap, you can owe tax even if you broke even. For example, if you won $50,000 and lost $50,000, you can only deduct $45,000 (90% of $50,000). The remaining $5,000 is taxable "phantom income."

Do all states tax gambling winnings?

No. Eight states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. All other states tax gambling winnings as ordinary income at their state rate.

When is a W-2G form issued?

For 2026, a W-2G is required when winnings reach $2,000 or more. For sports betting, lottery, and horse racing, there's an additional condition: the winnings must also be at least 300 times the amount of the wager.

Is the 24% federal withholding my actual tax rate?

Not necessarily. The 24% is a flat withholding rate — think of it as an advance payment to the IRS. Your actual tax depends on your total income and filing status. If you're in a higher bracket (32%, 35%, or 37%), you may owe additional tax. If you're in a lower bracket, you could get a refund.

Sources

• IRS Topic 419: Gambling Income and Losses

• IRS Instructions for Forms W-2G and 5754 (Rev. January 2026)

• Tax Foundation: 2026 Federal Income Tax Brackets

• Tax Foundation: 2026 State Income Tax Rates