Sports betting taxes 2026: what do I owe on my winnings?
By the W2gMatch team · Sources checked 09-28-2026 · General information, not tax advice.
Sports betting winnings are fully taxable in 2026 and go on Schedule 1, line 8b. A sportsbook issues Form W-2G when one bet pays $2,000 or more and at least 300 times the wager, and withholds 24% when the payout minus the wager exceeds $5,000 and is at least 300 times the wager. Losses count only if you itemize, and for 2026 only 90% of them (26 U.S.C. 165(d)).
Key takeaways for 2026
- Every sports betting win is taxable income in 2026, whether or not a form arrives, and it is reported in full on Schedule 1 (Form 1040), line 8b. [3] [4]
- A sportsbook issues Form W-2G for payments made in 2026 when a single wager pays $2,000 or more and at least 300 times the amount wagered. [2] The threshold is $2,000, not the $600 figure many older guides still show.
- The sportsbook withholds 24% federal tax only when the payout minus the wager is more than $5,000 and at least 300 times the wager. [2] Most winning years have had nothing withheld.
- For tax years beginning after December 31, 2025, only 90% of gambling losses are deductible, still capped at winnings, under 26 U.S.C. 165(d) as amended by Public Law 119-21, section 70114. [1] [7]
- Losses are deductible only if you itemize on Schedule A. Take the standard deduction and no loss counts at all. [3] [4]
What counts as a sports betting win
A win is what the bet paid above the stake you risked. Put $100 on a moneyline that returns $250 and the win is $150; the $100 coming back is your own money. A parlay is one wager, so a $20 parlay that pays $4,020 is a single $4,000 win. The stake on a losing bet is a loss, which lives on a different line of the return with its own limits, described below. The IRS calls all of it gambling income and says it is fully taxable. [3]
Withdrawing money is not what makes it taxable. Winnings count as gambling income whether or not you cash them out, so a balance you never withdrew is still reportable. Promotional credits and bonus bets are handled differently by each book; the 1099-K page covers the other forms a sportsbook may send besides the W-2G.
How much tax do you pay on sports betting winnings in 2026?
Sports betting winnings are ordinary income taxed at your federal marginal rate, which for tax year 2026 runs from 10% to 37%. [6] There is no special gambling rate. The winnings stack on top of your wages and other income, so a bettor whose other income already fills the 12% bracket pays 22% on winnings that land above $50,400 of taxable income if single, or $100,800 if married filing jointly. [6] Your state adds its own income tax on top, from nothing in Nevada and Florida to a top rate of 13.3% in California (12.3% plus the 1% surcharge over $1 million); the table below covers twelve states.
The 24% the sportsbook sometimes withholds is a deposit against that bill, not the bill itself. If your rate is higher, you owe the difference in April; if it is lower, you get the excess back.
When does a sportsbook send a W-2G in 2026?
A sportsbook files Form W-2G (the IRS information return an operator files, with a copy to you and a copy to the IRS, when one payout crosses the reporting threshold) for a sports wager when the winnings reach the reporting threshold, which is $2,000 for payments made in calendar year 2026, and are at least 300 times the amount of the wager. [2] Both tests must be met. A $500 bet that pays $3,000 clears $2,000 but is only 6 times the wager, so no form is issued. A $5 parlay that pays $2,505 clears both tests and produces a W-2G.
Because ordinary spreads, moneylines and totals pay close to even money, most sports bets never meet the 300-times test, and most winning years arrive with no form at all. That changes nothing about what is taxable: the form governs the paperwork, not the income. [3] Winnings from identical wagers are added together for the reporting and withholding tests. [2] The W-2G page goes deeper, and the W-2G threshold checker tests any wager and payout.
Federal withholding: 24% over $5,000
Regular gambling withholding is 24% and applies to a sports wager only when the winnings minus the wager are more than $5,000 and are at least 300 times the amount wagered. [2] Backup withholding, also 24%, applies when a winner does not furnish a correct taxpayer identification number. [2] Three wagers show where the lines fall:
Payments made in 2026. The $6,100 payout fails the 300-times test, so neither rule applies. The $5,010 payout is reportable but its $5,000 of proceeds does not exceed $5,000, so nothing is withheld. All three are taxable in full.
Since a profitable year of ordinary-sized bets has usually had no tax withheld, the IRS notes that you may need to pay estimated tax on the added income. [3] Bettors with meaningful winnings often make quarterly payments to avoid an underpayment penalty in April.
The 2026 rule: only 90% of losses are deductible
Starting with tax year 2026, you can deduct only 90% of your gambling losses, and only up to the amount of your winnings. Section 165(d) of the Internal Revenue Code now reads that the deduction for losses from wagering transactions “shall be equal to 90 percent of the amount of such losses during such taxable year” and “shall be allowed only to the extent of the gains from such transactions during such taxable year.” [1] The change was made by section 70114 of Public Law 119-21, signed July 4, 2025, and applies to taxable years beginning after December 31, 2025. [1] [7] The same section says that “losses from wagering transactions” include any otherwise allowable deduction incurred in carrying on a wagering transaction, which folds a professional bettor's expenses into the same limit. [1]
Winnings are still reported in full. The 90% applies only to the loss side, and losses still go where they always did: Schedule A, line 16, other itemized deductions, and only for taxpayers who itemize. [4] [5] The result for a bettor who breaks even is taxable income on money never kept, which practitioners call phantom income (taxable income created by the 90% limit in a year the bettor did not come out ahead: the 10% of losses the deduction no longer covers).
| Won / lost | Tax year 2025: 100% of losses, up to winnings | Tax year 2026: 90% of losses, up to winnings |
|---|---|---|
| $10,000 / $10,000 | Deduct $10,000. Taxable $0. | Deduct $9,000. Taxable $1,000. |
| $30,000 / $28,000 | Deduct $28,000. Taxable $2,000. | Deduct $25,200. Taxable $4,800. |
| $30,000 / $40,000 | Deduct $30,000 (capped). Taxable $0. | 90% is $36,000, capped at $30,000. Taxable $0. |
Same facts, both years, for a bettor who itemizes. Under the 2026 rule a break-even bettor owes tax on 10% of losses. The rule creates phantom income only when losses are below about 111% of winnings; above that, the cap at winnings binds first and nothing changes.
The sports betting tax calculator runs your own totals across every book under the 2025 and 2026 rules, and the 90% cap page is the rule on its own.
Four bettors, worked
All four itemize unless the example says otherwise, and the marginal rate used is 22%, the bracket that begins above $50,400 of taxable income for a single filer in 2026. [6] Federal tax only; states are below.
A year that ended exactly where it started costs $660 in federal tax in 2026 and nothing in 2025.
The bettor really made $2,000. The 2026 return taxes $4,800.
When losses exceed about 111% of winnings the cap binds first and the 90% rule changes nothing. The other $10,000 of losses is simply lost; nothing carries forward.
Itemizing $4,500 would cost this bettor $11,600 of standard deduction, so the losses are worth nothing and the full $6,000 is taxed. The same was true in 2025, when $5,000 also fell far below that year's standard deduction.
Do you itemize? The 2026 standard deduction hurdle
The standard deduction for tax year 2026 is $16,100 for single filers and married individuals filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household. [6] Gambling losses help only if your itemized deductions in total, including 90% of the losses, beat that figure. [3] For a bettor with no mortgage interest or large state taxes to itemize, that means the losses have to be large before they are worth anything, and the winnings are taxed in full regardless. Example D above is the common case.
State taxes on sports betting winnings
Most states with an income tax also tax gambling winnings, and their rules on losses do not always follow the federal deduction. The twelve states below each have a page with the revenue-department or statutory source for its row; the by-state page explains the four patterns.
| 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 |
Bettor tax and sportsbook tax are different numbers
The high percentages that appear in headlines about sports betting taxes, the rates a state charges on a sportsbook's revenue, are paid by the operator, not by you. A bettor pays ordinary federal income tax at 10% to 37% and ordinary state income tax at the state's normal rates. [6] Search results and AI summaries often blend the two; the table above is the bettor's side only.
How to report sports betting on your 2026 return
- Total your winnings for the year across every book, as wins, not as net profit, and enter the total on Schedule 1 (Form 1040), line 8b. [3] [4] Winnings reported on W-2Gs are a floor; the IRS already holds those under your Social Security number.
- Total your losses across every book. If you itemize, enter 90% of that total, but no more than the winnings on line 8b, on Schedule A, line 16, other itemized deductions. [1] [4] For a 2025 return, enter 100% of losses up to winnings.
- Claim the withholding. Federal tax withheld in box 4 of each W-2G is a payment on your return, and state tax in box 15 goes on the state return. [2]
- Pay estimated tax during the year if a winning season has had nothing withheld. [3]
Whether you tally wins bet by bet or by session matters, and the IRS has accepted netting within a single session of play for casual gamblers. [11] How that concept reaches online sports betting is covered on the session method page.
Records the IRS expects you to keep
To deduct losses you must keep an accurate diary or similar record of winnings and losses and be able to provide receipts, tickets, statements or other records showing the amount of both. [3] [5] For online sports betting that means three things: the wagering history you can export from each book, the annual win/loss statement each book offers, and your own log. A sports session log row holds the date, the book, the amount wagered, the amount paid out and the net for that session; the session log template is built that way. Statement pages for DraftKings, FanDuel, BetMGM and bet365 show where each book keeps its statement.
Under the 90% rule every documented dollar of loss is worth less than it was, so an undocumented dollar costs more. A win/loss statement on its own is the book's estimate; the diary is what the IRS asks for.
What sportsbooks report to the IRS, and what they do not
A sportsbook reports each W-2G-level payout to the IRS, with your taxpayer identification number in box 9 and any federal withholding in box 4. [2] The W-2G has no box for losses. No sportsbook reports your annual net result, so the IRS knows your reportable wins and nothing about the rest; the return has to be built from your own records, and a return that reports less than the W-2Gs on file draws a CP2000 notice.
Will the 90% rule be repealed before 2026 returns are filed?
Not yet, and nothing is enacted. On September 16, 2026 the House Ways and Means Committee voted 38-5 to advance H.R. 10357, a digital-asset tax bill introduced by Rep. Jason Smith, carrying language that would remove the 90% limit and restore the full deduction for taxable years beginning after December 31, 2025, which would reach the 2026 return. [8] [9] The House is not expected to vote before the November 2026 midterm elections, the Senate has not acted, and the bill would still need the President's signature. [8] [10] The House Rules Committee declined to add the FAIR BET Act (H.R. 4304, Rep. Dina Titus) to the defense authorization bill, reported January 10, 2026. [12] [10] Until a repeal is signed, the 90% limit is the law for 2026 returns filed in 2027, and we will update this page if that changes.
Related questions
Do I have to pay taxes on sports betting winnings in 2026?
Yes. All sports betting winnings are taxable ordinary income and go on Schedule 1 (Form 1040), line 8b, whether or not the sportsbook sends a Form W-2G.
When does a sportsbook send a W-2G in 2026?
When a single bet pays $2,000 or more and the payout is at least 300 times the wager. Most sports bets fail the 300-times test, so most winnings arrive with no form.
How much does a sportsbook withhold?
24% of the proceeds, the payout minus the wager, when the proceeds exceed $5,000 and are at least 300 times the wager. Below that nothing is withheld, so you may owe in April or need estimated payments.
Can I deduct sports betting losses in 2026?
Only if you itemize, and only 90% of your losses, capped at your winnings, under 26 U.S.C. 165(d) as amended by Public Law 119-21 for tax years beginning after December 31, 2025. Win $10,000 and lose $10,000 and you deduct $9,000 and pay tax on $1,000.
Does the 90% rule apply to my 2025 return?
No. Returns for tax year 2025, filed in early 2026, use the old rule: losses deductible up to winnings. The 90% limit starts with tax year 2026 returns filed in 2027.
Is the W-2G threshold for sports betting $600 or $2,000?
$2,000 for payments made in 2026, together with the 300-times-the-wager test, under the IRS Instructions for Forms W-2G and 5754 revised January 2026. The $600 figure in older guides is out of date.
Can I report only my net sports betting profit for the year?
No. Winnings are reported in full on Schedule 1 and losses are a separate itemized deduction on Schedule A. Netting is allowed only within a single session under the session method, not across the year.
Has the 90% gambling loss limit been repealed?
No. On September 16, 2026 the House Ways and Means Committee voted 38-5 to advance H.R. 10357 with language restoring the full deduction from tax year 2026, but the House has not voted, the Senate has not acted, and nothing is signed. The 90% limit remains the law for 2026 returns.
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Sources
- 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
- IRS Instructions for Forms W-2G and 5754, Rev. January 2026
- IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
- IRS Instructions for Schedule A (Form 1040), line 16, Other itemized deductions, tax year 2025 edition
- IRS Publication 529, Miscellaneous Deductions, Gambling losses up to the amount of gambling winnings, Rev. December 2020
- IRS news release IR-2025-103, tax inflation adjustments for tax year 2026 (standard deduction and rate brackets), October 9, 2025
- GovInfo, Public Law 119-21 (H.R. 1), approved July 4, 2025, approved July 4, 2025
- Covers, House committee advances repeal of 90 percent gambling loss deduction limit, September 16, 2026 (secondary source)
- Betting News, H.R. 10357 advances gambling loss tax deduction fix, September 17, 2026 (secondary source)
- CPA Practice Advisor (Las Vegas Review-Journal), Bill to reverse change made to gambling tax code advances in House, September 24, 2026 (secondary source)
- IRS Office of Chief Counsel, AM 2008-011, Reporting of wagering gains and losses, December 12, 2008
- CDC Gaming, House Rules Committee blocks FAIR BET Act, leaving 2026 gambling tax reform uncertain, January 10, 2026 (secondary source)
Related
- Do I have to report sports betting winnings?
- When do sportsbooks issue a W-2G in 2026 ($2,000 and 300x)?
- What is the OBBBA 90% gambling loss cap for 2026?
- Can I deduct gambling losses in 2026?
- What is the session method for gambling taxes in 2026?
- Which states tax gambling and sports betting winnings, and which allow losses?
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.