Which states tax gambling and sports betting winnings, and which allow losses?
By the W2gMatch team · Sources checked 09-06-2026 · General information, not tax advice.
Most states tax gambling winnings; Nevada and Florida do not. Rates run from Arizona's flat 2.5% to New York's 10.9% top bracket. Illinois, Ohio and Indiana allow no deduction for losses at all. New Jersey and Pennsylvania net losses on their own returns. The rest follow the federal itemized deduction, with the 90% limit reaching some state returns and not others.
Twelve states, side by side
| State | Taxes winnings? | Rate | Losses | State withholding |
|---|---|---|---|---|
| Arizona | Yes | flat 2.5% | Itemized on AZ Schedule A, up to gains; lottery subtraction adjusts | 2.5% on federally withheld payouts from sportsbooks, fantasy, lottery and racing |
| California | Yes | 1% to 12.3%, plus 1% over $1 million | Itemized, up to winnings; federal 90% limit not adopted | None on gambling payouts (federal only) |
| Colorado | Yes | flat 4.4% (TABOR can lower a year) | Follows the federal deduction (90% limit carries through) | 4% on federally withheld payouts, since January 9, 2026 |
| Florida | No state income tax | none | No state return; federal rules only | None (federal only) |
| Illinois | Yes | flat 4.95% | No deduction at all | 4.95% on federally withheld payouts and lottery payments of $1,000 or more |
| Indiana | Yes | flat 2.95% plus county tax | No deduction at all | 2.95% from slot and keno wins of $2,000+ and other reportable winnings |
| Michigan | Yes | flat 4.25% | Deduction equals the federal itemized amount (so the 90% limit flows through); none without federal itemizing | State withholding on W-2G-level wins (see flag) |
| Nevada | No state income tax | none | No state return; federal rules only | None (federal only) |
| New Jersey | Yes | 1.4% to 10.75% | Netted against same-year winnings on the NJ return; no itemizing needed | 3% on gambling payouts; 5% to 8% on lottery prizes over $10,000 |
| New York | Yes | 4% to 10.9%, plus NYC and Yonkers | NY itemized deduction up to winnings; state itemizing allowed without federal itemizing | On federally withheld payouts and lottery prizes over $5,000, at the top rate |
| Ohio | Yes | flat 2.75% above $26,050 | No deduction at all | 2.75% from any W-2G-reportable win (casino, sports, lottery) |
| Pennsylvania | Yes | flat 3.07% | Cost of wagers subtracted on Schedule T, not below zero; no itemizing needed | 3.07% on PA Lottery prizes over $5,000; W-2G copies filed with the state |
Each state page carries the revenue-department or statutory source for its row and the date it was checked. The federal rules underneath every row are the IRS's. [1] [2]
Four patterns
- No state tax. Nevada and Florida. The federal return is the whole story; a visitor from elsewhere owes their home state.
- Tax the gross, deduct nothing. Illinois, Ohio and Indiana start from federal adjusted gross income and have no line for losses. A break-even year is taxed on every dollar won.
- Follow the federal itemized deduction. Colorado (from federal taxable income), Michigan (the federal itemized amount), Arizona and New York (their own itemized schedules). Whether the federal 90% limit reaches the state return depends on each state's conformity, and the state pages say which is settled. California conforms to an earlier date and does not apply the 90% limit.
- Their own netting. New Jersey nets losses against same-year winnings on its return; Pennsylvania subtracts the cost of wagers within the gambling class. Neither needs federal itemizing, and neither is touched by the federal 90% limit.
What a multi-state bettor does with this
The home state taxes everything and usually credits tax paid to the state where the bet was placed. The state where the bet was placed taxes its own source winnings and may withhold at the window. A bettor who lives in Illinois and plays in Michigan files in both, pays Michigan on the Michigan wins, credits that on the Illinois return, and deducts nothing in Illinois. The session log has a location column for exactly this reason.
Related questions
Which states have no tax on gambling winnings?
Among the large gambling states, Nevada and Florida have no personal income tax, so they tax no winnings. Residents of other states who win there still owe their home state.
Which states do not allow a deduction for gambling losses?
Illinois, Ohio and Indiana allow none. They start from federal adjusted gross income and provide no adjustment for losses, so the gross winnings are taxed.
Does the federal 90% loss limit apply on state returns?
It depends on the state. Colorado and Michigan follow the federal figure, so it carries through. California conforms to the code as of January 1, 2025 and does not apply it. New Jersey and Pennsylvania have their own netting rules that it never touches.
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Start with your own state
Each state page gives the rate, the loss rule, the withholding and the nonresident rule with the document behind each.
Sources
- IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
- 26 U.S.C. § 165(d), Wagering losses, as amended by Pub. L. 119-21 § 70114 (Legal Information Institute), amendment effective for taxable years beginning after December 31, 2025
- American Gaming Association, State of the States 2026, 2026 (secondary source)
Related
This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.