How Are Gambling Winnings Taxed in the US
In the United States, all gambling winnings are considered taxable income. This rule generally applies whether you gamble occasionally or professionally, and regardless of whether the winnings come from a casino, sports betting, lottery, or online gambling. Even small winnings are technically taxable and must be reported on your tax return.
Your gambling winnings are included in your total income for the year and are used when calculating your Adjusted Gross Income (AGI).
Adjusted Gross Income (AGI) is your total income after certain allowable adjustments (often called “above-the-line deductions”). These adjustments may include items such as retirement plan contributions, student loan interest, certain education expenses, or business expenses for self-employed individuals, depending on your personal tax situation. After applying these adjustments, your AGI is calculated, and all gambling winnings are included in that amount for tax purposes.
Standard vs Itemized Deductions
After determining your AGI, you can reduce your taxable income by claiming either:
- Standard Deduction, or
- Itemized Deductions
You cannot claim both — you must choose one.
The standard deduction is a fixed amount that is determined based on your filing status and that reduces your taxable income.
For example, the following standard deductions apply for 2026:
- $15,750 for a single filer;
- $31,500 for married filing jointly.
Instead of taking the standard deduction, some taxpayers choose to itemize deductions. This choice is particularly relevant for gamblers who want to deduct gambling losses. To determine which method saves you more money, you can use a gambling winnings tax calculator to compare your potential tax bill under both scenarios.
This means your taxable income is automatically reduced by that amount. Some taxpayers may qualify for additional standard deduction amounts, such as if they:
- are 65 or older, or
- are blind
These additional amounts are added to the standard deduction. The standard deduction is the simplest option and is used by most taxpayers.
Instead of taking the standard deduction, some taxpayers choose to itemize deductions.
Itemizing means listing specific deductible expenses, such as medical expenses (above certain thresholds), state and local taxes, mortgage interest, and charitable donations.
Please note that it is reasonable to itemize if their total eligible itemized deductions exceed the standard deduction. This choice is particularly relevant for gamblers who want to deduct gambling losses.
After accounting for all eligible exemptions, credits, and deductions, the remaining amount of income is taxed according to the applicable federal income tax brackets, which determine your final tax liability.
Possibility to Offset Your Income with Gambling Losses
It is generally possible to offset gambling winnings with gambling losses, but the following rules apply:
- You Must Itemize Your Deductions. You can only deduct gambling losses if you itemize deductions on your tax return. If you claim the standard deduction, you cannot deduct gambling losses. If you choose the standard deduction, you forfeit the ability to write off gambling losses. The only way to claim these losses is by itemizing deductions on Schedule A. Whether it makes sense to itemize depends on whether your total itemizable expenses (such as charitable contributions, mortgage interest, certain medical expenses, and gambling losses) exceed the standard deduction for your filing status.
- Losses Can’t Exceed Winnings. Gambling losses can only be deducted up to the amount of your gambling winnings for the same tax year.
- Losses Must Be Properly Documented. All gambling losses should be supported by adequate documentation and records. For more information on how to document gambling losses, please refer to our guide: ‘How to Document Gambling Losses: What the IRS Expects as Evidence’.
Taxation at the State Level
Gambling winnings may also be subject to taxation at the state level.
Many states follow rules similar to federal tax law, but important differences may exist. For example, some states allow gambling losses to be deducted, while others limit or disallow such deductions. While federal rules allow for itemizing, remember that state gambling tax rules in places like NJ, MI, PA, or WV may differ significantly regarding loss deductions.
Tax Withholding by Gambling Establishments
In certain cases, the casino or gambling operator may withhold tax from gambling winnings. This withholding is treated as an estimated tax payment toward your overall tax liability.
Your final tax liability may ultimately be higher or lower depending on your overall income and personal tax situation. After filing your tax return, you may receive a refund if too much tax was withheld, or you may need to pay additional tax.
Casinos and gambling operators typically issue Form W-2G when winnings exceed specific reporting thresholds. However, you are still required to report all gambling winnings.
Disclaimer: This information is provided for general informational purposes only and should not be considered tax advice. The guidance above does not take into account all factors relevant to an individual taxpayer’s situation. Tax laws and individual circumstances may vary. Therefore, it is strongly recommended to consult a qualified tax advisor or tax professional for advice tailored to your specific situation.
Sources used:
- New Jersey Division of Taxation. Form NJ1040 Instructions. Available at:
https://www.nj.gov/treasury/taxation/pdf/current/1040i.pdf - New Jersey Division of Taxation. Gambling and Lottery Winnings. Available at:
https://www.nj.gov/treasury/taxation/lotterygamblingwinnings.shtml - Michigan Department of Treasury. Revenue Administrative Bulletin 202222: Treatment of Gambling Gains, Losses, and Expenses. Available at:
https://www.michigan.gov/taxes/-/media/Project/Websites/treasury/RAB/2022/RAB-202222-Treatment-of-Gambling-Gains-Losses-Expenses.pdf - Michigan Department of Treasury. Are gambling and lottery winnings subject to Michigan individual income tax? Available at:
https://www.michigan.gov/taxes/questions/iit/accordion/taxable/are-gambling-lottery-winnings-subject-to-michigan-individual-income-tax-1 - TaxSlayer Support. Can I itemize on my West Virginia return if I claimed the standard deduction on the federal return? Available at:
https://support.taxslayer.com/hc/en-us/articles/360028991912-Can-I-Itemize-on-my-West-Virginia-return-if-I-claimed-the-standard-deduction-on-the-federal-return - West Virginia State Tax Department. Tax Topic: Gambling Income (TSD432).
- Pennsylvania Department of Revenue. Gambling and Lottery Winnings.
