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Taxes on sports betting winnings

Federal tax basics in plain English. This is general information from IRS and statute sources, not tax advice; talk to a tax professional about your situation.

Last verified: 2026-10-17. Education only, not betting, legal or tax advice.

Winnings are taxable income

The IRS says gambling winnings are fully taxable and must be reported on your return. Gambling income includes winnings from lotteries, raffles, sports betting, horse races and casinos. You report all winnings on Form 1040 (via Schedule 1), including winnings that are not reported on a Form W-2G. That means no tax form arriving does not mean the winnings are tax-free.

When a sportsbook issues Form W-2G

For sports wagering, the IRS instructions say a payer files Form W-2G for winnings that meet or exceed the applicable reporting threshold if the winnings are at least 300 times the wager. The instructions' "What's New" says the minimum threshold amount for 2026 is $2,000. Because many bets pay far less than 300 times the wager, many winners do not receive a W-2G. Test a payout with the W-2G check.

Federal withholding of 24%

The instructions say a payer must withhold federal income tax from sports wagering winnings if the winnings minus the wager exceed $5,000 and the winnings are at least 300 times the wager. The withholding is 24% of the proceeds (winnings minus the wager). Example: a $6,000 payout on a $10 wager is 600 times the wager with net winnings of $5,990, so 24% of $5,990 = $1,437.60. If you do not provide a taxpayer identification number, backup withholding at 24% can also apply.

Deducting losses

The IRS says you may deduct gambling losses only if you itemize deductions (Schedule A) and kept a record of your winnings and losses, and the deduction cannot be more than the gambling income you reported. You must keep an accurate diary or similar record, with receipts, statements or tickets showing both winnings and losses (IRS Publication 529 covers recordkeeping).

What changes in 2026: the 90 percent limit

A 2025 law (Public Law 119-21, section 70114) changed the wagering-loss deduction for tax years beginning after December 31, 2025. The deduction is now limited to 90 percent of your wagering losses for the year, and only up to your wagering gains for the year. IRS proposed regulations published in 2026 reflect this. Example (our arithmetic from the statute): with $50,000 of winnings and $50,000 of losses in 2026, the deduction is limited to $45,000, which leaves $5,000 of taxable income even though you broke even, for taxpayers who itemize. For taxpayers who do not itemize, no loss deduction is available. Note that the IRS Topic 419 page (updated September 24, 2026) does not mention this change yet; the statute and the IRS bulletin do.

State taxes and other products

State income tax rules on gambling winnings differ; check your state tax agency. This page covers federal rules for sports betting only. Prediction-market and other products may be reported differently; ask a tax professional.