Sports Betting · Tax Guide · Updated 2026-07-02
State-by-State Sports Betting Tax Guide
Every legal US sportsbook market handles winnings a little differently. Federal rules are consistent — sportsbooks issue a W-2G on qualifying wins and withhold 24% federal tax — but state income tax and state-level withholding vary widely. Use the table below to see what applies where you play, then keep a contemporaneous session ledger so you can reconcile totals at filing time.
How state sports betting tax works
- Federal baseline. The IRS treats all sports betting winnings as ordinary income. Books issue Form W-2G on wins of $600+ at 300:1 odds and withhold 24% federal tax on wins over $5,000.
- State income tax. Your state taxes winnings at its ordinary income-tax rate — flat or graduated. States with no personal income tax (NV, TN, TX, WA, WY, NH) don't tax winnings at all.
- State withholding. Some states require the sportsbook to withhold state tax up front on W-2G-qualifying wins. The rate isn't always the same as the top bracket — Ohio, Kentucky, and West Virginia set fixed withholding rates above their income-tax rates.
- Non-resident rules. Winning in a state you don't live in usually means filing a non-resident return there, then claiming a credit on your home state's return.
State tax rates on sports betting winnings
Ordinary-income rates and W-2G withholding by state. Verify current rates with your state's Department of Revenue before filing.
| State | Income-tax rate | Sportsbook withholding | Notes |
|---|---|---|---|
| Arizona | 2.5% flat | None at payout | Report on AZ Form 140. Federal W-2G still applies on qualifying wins. |
| Arkansas | Up to 4.4% | None at payout | Winnings taxed as ordinary income at AR graduated rates. |
| Colorado | 4.4% flat | 4.4% on W-2G wins | CO withholds state tax when federal withholding applies. |
| Connecticut | Up to 6.99% | 6.99% on W-2G wins | CT withholds when winnings trigger a federal W-2G. |
| Illinois | 4.95% flat | 4.95% on W-2G wins | IL withholds on any wager where federal withholding is required. |
| Indiana | 3.05% flat | 3.15% on W-2G wins | IN withholding rate is set slightly above the base income-tax rate. |
| Iowa | Up to 5.7% | 5% on W-2G wins | Non-residents also subject to IA withholding on IA-source winnings. |
| Kansas | Up to 5.7% | 5% on W-2G wins | Report on KS Form K-40. |
| Kentucky | 4.0% flat | 6% on W-2G wins | KY withholding rate exceeds the flat income-tax rate. |
| Louisiana | Up to 4.25% | 6% on W-2G wins | LA taxes gambling winnings as ordinary income. |
| Maine | Up to 7.15% | 5% on W-2G wins | ME withholds on any W-2G-triggering win. |
| Maryland | Up to 5.75% | 8.95% residents / 8% non-residents | MD withholds aggressively on prizes above $5,000. |
| Massachusetts | 5% flat (9% surtax >$1M) | 5% on W-2G wins | Millionaire's surtax can apply to very large jackpots. |
| Michigan | 4.25% flat | 4.25% on W-2G wins | MI allows itemized deduction of gambling losses up to winnings for detailed filers. |
| Nevada | 0% | None | No state income tax. Federal 24% W-2G withholding still applies. |
| New Hampshire | 0% on wages | None | NH does not tax personal wage or gambling income. |
| New Jersey | Up to 10.75% | 3% on wins >$10,000 | See our NJ Lottery Tax Guide for a full walkthrough. |
| New York | Up to 10.9% | 10.9% residents / 8.82% non-residents | NYC and Yonkers add local surtaxes. |
| North Carolina | 4.5% flat | 4.5% on W-2G wins | NC withholds when federal withholding applies. |
| Ohio | Up to 3.5% | 4% on W-2G wins | OH withholding rate is fixed regardless of taxpayer bracket. |
| Pennsylvania | 3.07% flat | 3.07% on W-2G wins | PA taxes gambling winnings but disallows loss deductions. |
| Tennessee | 0% | None | No state income tax on winnings. |
| Texas | 0% | None | No state income tax. Retail sportsbooks not currently legal. |
| Vermont | Up to 8.75% | 6% on W-2G wins | VT withholds on qualifying wins. |
| Virginia | Up to 5.75% | 4% on W-2G wins | VA taxes gambling winnings as ordinary income. |
| Washington | 0% | None | No state income tax. Retail-only tribal sportsbooks. |
| West Virginia | Up to 5.12% | 6.5% on W-2G wins | WV withholding rate is fixed above the top bracket. |
| Wyoming | 0% | None | No state income tax on winnings. |
Common questions
Do I owe state tax if I bet in a different state?
Usually yes. The state where the wager was placed taxes the winnings at its non-resident rate. Your home state then taxes the same winnings but grants a credit for tax paid elsewhere so you're not double-taxed.
Can I deduct losses against winnings on my state return?
It depends. States like Michigan mirror the federal itemized-deduction treatment. Others — notably Illinois, Ohio, and Pennsylvania — don't let you deduct gambling losses at the state level, so you can owe state tax even in a losing year.
What if the sportsbook didn't issue a W-2G?
You still owe tax on every winning session. W-2G thresholds are reporting rules for the operator, not a floor for your liability. Keep a session log — NetBetTracker generates one automatically from your entries.