Sports Betting Tax Rate: How Much You'll Pay on Winnings
The IRS taxes sports betting winnings as ordinary income, which means the rate you pay depends on how much you earn in total for the year. Depending on your income level and filing status, your federal sports betting tax rate could be anywhere from 10 percent to 37 percent, and many states add their own income tax on top.
This guide breaks down the federal tax brackets that apply to your winnings, explains how state taxes factor in, and walks through real examples so you can estimate your tax bill. For a broader overview of all gambling tax obligations, see our complete guide to sports betting taxes.
Important: This article is for general educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently, and individual circumstances vary. Always consult a qualified tax professional or CPA for advice specific to your situation. The IRS website (irs.gov) and your state revenue department are the authoritative sources for current tax rules.
What is the tax rate on sports betting winnings?
There is no single sports betting tax rate. The IRS treats gambling winnings as ordinary income, so they are taxed at the same rates as your wages, salary, and other earnings. Your tax rate is determined by your total taxable income for the year, not just your gambling winnings.
Federal income tax rates for 2025 range from 10 percent to 37 percent across seven brackets. When you win a sports bet, that money gets added to your total income and is taxed at your marginal rate.
Here is a quick snapshot of how this works in practice:
| Your Total Taxable Income (Single) | Marginal Federal Tax Rate |
|---|---|
| Up to $11,925 | 10% |
| $11,926 to $48,475 | 12% |
| $48,476 to $103,350 | 22% |
| $103,351 to $197,300 | 24% |
| $197,301 to $250,525 | 32% |
| $250,526 to $626,350 | 35% |
| Over $626,350 | 37% |
Key points to understand about this table:
- These are marginal rates, meaning only the income within each bracket is taxed at that rate
- Your sports betting winnings sit on top of your other income, so they are taxed at your highest applicable rate
- Most recreational bettors fall in the 12 percent to 24 percent range
Unlike long-term capital gains from stocks, there is no preferential tax rate for gambling winnings. The IRS classifies them as other income on your return, and they are always taxed at ordinary rates.
2025 federal tax brackets explained for sports bettors
Understanding tax brackets is essential for estimating what you will owe on your betting winnings. Here are the full 2025 brackets for the two most common filing statuses.
Single filers
| Taxable Income Range | Tax Rate | Tax Owed on This Bracket |
|---|---|---|
| $0 to $11,925 | 10% | Up to $1,192.50 |
| $11,926 to $48,475 | 12% | Up to $4,386 |
| $48,476 to $103,350 | 22% | Up to $12,072.50 |
| $103,351 to $197,300 | 24% | Up to $22,548 |
| $197,301 to $250,525 | 32% | Up to $17,031.80 |
| $250,526 to $626,350 | 35% | Up to $131,538.50 |
| Over $626,350 | 37% | 37% of amount over $626,350 |
Married filing jointly
| Taxable Income Range | Tax Rate | Tax Owed on This Bracket |
|---|---|---|
| $0 to $23,850 | 10% | Up to $2,385 |
| $23,851 to $96,950 | 12% | Up to $8,772 |
| $96,951 to $206,700 | 22% | Up to $24,145 |
| $206,701 to $394,600 | 24% | Up to $45,096 |
| $394,601 to $501,050 | 32% | Up to $34,064 |
| $501,051 to $751,600 | 35% | Up to $87,692.50 |
| Over $751,600 | 37% | 37% of amount over $751,600 |
These bracket thresholds are adjusted annually for inflation. Always confirm the current year thresholds with the IRS or a tax professional before filing.
How sports betting winnings affect your tax bracket
One of the most common misconceptions about taxes is that moving into a higher bracket means all of your income is taxed at that higher rate. That is not how the US tax system works.
The federal income tax is progressive, meaning each dollar is taxed at the rate for the bracket it falls into. Your sports betting winnings stack on top of your other income, so only the portion that crosses into a new bracket gets taxed at the higher rate.
Example: single filer earning $46,000 with $5,000 in betting winnings
Without the betting winnings, this person has $46,000 in taxable income and falls entirely within the 12 percent bracket (the bracket covers $11,926 to $48,475).
Adding $5,000 in sports betting winnings brings total taxable income to $51,000. Here is how the tax breaks down:
| Income Portion | Rate | Tax |
|---|---|---|
| First $11,925 | 10% | $1,192.50 |
| $11,926 to $48,475 | 12% | $4,386 |
| $48,476 to $51,000 (betting winnings pushing into 22% bracket) | 22% | $555.80 |
In this scenario, most of the betting winnings ($2,475) are taxed at 12 percent, and only the portion above $48,475 ($2,525) is taxed at 22 percent. The effective tax rate on the $5,000 in winnings is about 17.5 percent, not 22 percent.
Example: single filer earning $100,000 with $10,000 in betting winnings
This person is already in the 22 percent bracket. Adding $10,000 brings total income to $110,000, crossing into the 24 percent bracket at $103,351.
| Portion of $10,000 Winnings | Rate | Tax on This Portion |
|---|---|---|
| First $3,350 (fills remaining 22% bracket) | 22% | $737 |
| Remaining $6,650 (enters 24% bracket) | 24% | $1,596 |
Total federal tax on $10,000 in winnings: approximately $2,333, or an effective rate of about 23.3 percent. This is the bracket creep effect in action. The winnings themselves did not increase the rate on the bettor's salary, but the top slice of income now sits in a higher bracket.
Key takeaway
Your sports betting winnings do not change the tax rate on the rest of your income. They simply add to your total, and the additional dollars are taxed at whatever bracket they land in. For most recreational bettors, the effective federal rate on winnings falls somewhere between 12 and 24 percent.
State tax rates on sports betting winnings
Federal taxes are only part of the equation. Most states also tax gambling winnings as part of your state income tax, which adds another layer to your total tax bill.
State income tax rates on gambling winnings vary widely:
| State Tax Situation | Examples | State Tax Rate on Winnings |
|---|---|---|
| No state income tax | Texas, Florida, Nevada, Wyoming, Tennessee, New Hampshire, South Dakota, Alaska, Washington | 0% |
| Flat state income tax | Illinois (4.95%), Indiana (3.05%), Pennsylvania (3.07%), Michigan (4.25%), Colorado (4.4%) | Varies by state |
| Progressive state income tax | New York (up to 10.9%), California (up to 13.3%), New Jersey (up to 10.75%) | Depends on total income |
If you live in a state with no income tax, you only owe federal tax on your sports betting winnings. If you live in a high-tax state like New York or California, your combined federal and state rate could exceed 45 percent on winnings that fall in the top brackets.
Some cities add local income taxes as well. New York City residents, for example, pay city income tax on top of state and federal taxes, which can push the combined rate even higher.
For a detailed breakdown of how each state handles sports betting tax, see our guide on state taxes on sports betting winnings.
Combined federal and state tax rates
To understand your total tax obligation, you need to add your federal and state rates together. Here are some examples of what bettors in different states might pay on winnings in the 22 percent federal bracket:
| State | State Rate (Approx.) | Federal Rate | Combined Rate |
|---|---|---|---|
| Texas / Florida / Nevada | 0% | 22% | 22% |
| Colorado | 4.4% | 22% | 26.4% |
| Illinois | 4.95% | 22% | 26.95% |
| New Jersey | Up to 10.75% | 22% | Up to 32.75% |
| New York (NYC resident) | Up to 10.9% + 3.876% city | 22% | Up to 36.78% |
| California | Up to 13.3% | 22% | Up to 35.3% |
These are marginal combined rates for someone in the 22 percent federal bracket. Your actual combined rate may differ based on your total income and whether your state uses flat or progressive rates. Bettors in no-income-tax states have a meaningful advantage, potentially keeping 10 to 15 percent more of their winnings compared to bettors in high-tax states.
The 24 percent federal withholding rate explained
When you hear that sports betting is taxed at 24 percent, this usually refers to the federal withholding rate, not your actual tax rate. These are two different things, and confusing them is one of the most common mistakes bettors make.
When does withholding happen?
Sportsbooks are required to withhold 24 percent of your winnings for federal taxes when your payout meets both of these conditions:
- The winnings are $600 or more, AND
- The payout is at least 300 times the amount wagered
When these thresholds are met, the sportsbook issues a Form W-2G and sends a copy to both you and the IRS. The 24 percent is withheld automatically and sent directly to the IRS on your behalf.
Withholding is not your final tax bill
The 24 percent withholding is an estimated prepayment, similar to payroll withholding from your paycheck. Your actual tax liability may be higher or lower depending on your total income.
| Scenario | Withholding (24%) | Actual Tax Rate | Result |
|---|---|---|---|
| Low-income bettor (12% bracket) | $2,400 on $10K win | ~12% | Refund of ~$1,200 |
| Middle-income bettor (22% bracket) | $2,400 on $10K win | ~22% | Refund of ~$200 |
| Higher-income bettor (32% bracket) | $2,400 on $10K win | ~32% | Owe additional ~$800 |
If your actual tax rate is lower than 24 percent, you will receive a refund for the difference when you file your return. If your rate is higher, you will owe additional tax. This is why it is important to know your actual marginal rate rather than assuming 24 percent covers your obligation.
For more details on how withholding works and when sportsbooks are required to withhold, see our guide on sports betting tax withholding.
How to calculate your effective tax rate on winnings
Your effective tax rate is the total tax you pay divided by your total income. It is always lower than your marginal rate because of the progressive bracket structure. Here is a simplified approach for estimating the tax on your sports betting winnings.
Step-by-step calculation
- Determine your non-gambling taxable income (wages, salary, investment income minus deductions)
- Add your net gambling winnings to get your total taxable income
- Apply the tax brackets to your total income
- Subtract the tax you would owe without the gambling income to isolate the tax on your winnings
This gives you the marginal tax on your sports betting winnings specifically.
Quick reference: estimated federal tax on winnings by income level
| Your Salary (Single Filer) | $2,000 in Winnings | $10,000 in Winnings | $50,000 in Winnings |
|---|---|---|---|
| $30,000 | $240 (12%) | $1,200-$1,540 (12-22%) | $7,280-$9,680 (mixed brackets) |
| $60,000 | $440 (22%) | $2,200 (22%) | $10,200-$11,400 (22-24%) |
| $100,000 | $440-$480 (22-24%) | $2,333 (22-24%) | $11,540-$12,740 (24%) |
| $150,000 | $480 (24%) | $4,800 (24%) | $12,000-$13,600 (24-32%) |
These are approximate federal taxes only. Add your state tax rate for the total picture. For a personalized estimate, use our sports betting tax calculator.
The impact of gambling loss deductions
If you itemize your deductions (rather than taking the standard deduction), you can deduct gambling losses up to the amount of your gambling winnings. This can reduce the taxable amount of your winnings.
For example, if you won $10,000 but lost $7,000 during the year, and you itemize, you can deduct the $7,000 in losses, reducing your taxable gambling income to $3,000.
Important limitations to keep in mind:
- You can only deduct losses up to the amount of your winnings (you cannot create a net loss)
- You must itemize deductions on Schedule A to claim gambling losses
- The standard deduction for 2025 is $15,000 for single filers and $30,000 for married filing jointly, so itemizing only makes sense if your total itemized deductions exceed these amounts
- You need records to support your loss claims (bet history, sportsbook statements)
Starting in 2026, the One Big Beautiful Bill Act (OBBBA) introduces a 90 percent cap on gambling loss deductions, meaning you can only deduct up to 90 percent of your winnings rather than the full amount. This change effectively creates a minimum tax on gambling activity. See our complete sports betting tax guide for details on how OBBBA affects your tax planning.
Strategies to manage your betting tax obligation
Knowing your tax rate is the first step. Here are practical strategies to stay on top of your tax obligation throughout the year.
Track every bet
Keep a detailed log of all your wagers, including wins and losses, across every sportsbook you use. Most sportsbooks provide annual statements or downloadable bet history, typically found in your account settings or transaction history section. Save these records throughout the year rather than scrambling at tax time. At a minimum, your records should include the date, type of bet, amount wagered, amount won or lost, and which sportsbook you used. If you bet across multiple platforms, consider maintaining a spreadsheet that consolidates all activity in one place.
Set aside money for taxes
A good rule of thumb is to set aside 25 to 30 percent of your net winnings for taxes as you go. This covers the federal withholding rate and leaves room for state taxes. Waiting until April to figure out your tax bill can lead to unpleasant surprises.
Consider quarterly estimated payments
If you expect to owe $1,000 or more in taxes beyond what is withheld, the IRS may require you to make quarterly estimated tax payments using Form 1040-ES. The quarterly deadlines are typically April 15, June 15, September 15, and January 15 of the following year. Missing these payments can result in underpayment penalties and interest charges. This is especially relevant for bettors who have a profitable year with several large wins that did not trigger automatic withholding.
Understand your deduction strategy
Review whether itemizing deductions makes sense for your situation. If your total itemized deductions (including gambling losses, mortgage interest, state taxes, and charitable contributions) exceed the standard deduction, itemizing allows you to offset some of your gambling income.
If you primarily take the standard deduction, your gambling losses do not reduce your taxable income. This means you pay tax on gross winnings without any offset for losses, which can feel unfair but is how the current system works for non-itemizers.
Know when to consult a professional
If you had a particularly profitable year, bet on multiple platforms, or live in a state with complex gambling tax rules, working with a CPA who understands gambling income is worth the cost. They can help you optimize your deductions and avoid penalties. For more on the distinction between casual and professional gambling, see our guide on professional gambler vs. casual bettor tax implications.
For a detailed walkthrough of the actual filing process, our guide on how to report sports betting winnings on your tax return covers each form and step.
Frequently asked questions
What percentage does the IRS take from sports betting winnings?
The IRS does not take a fixed percentage from all sports betting winnings. Your tax rate depends on your total income and filing status. Federal rates range from 10 percent to 37 percent. Sportsbooks withhold 24 percent on large payouts (over $600 at 300:1 odds or more), but this is an estimated prepayment. You may owe more or receive a refund when you file depending on your actual tax bracket.
Do I pay taxes on sports betting if I lost money overall?
Under current federal rules, yes. Gambling winnings and losses are reported separately. You report all winnings as income, and you can only deduct losses if you itemize deductions on Schedule A. If you take the standard deduction, you cannot offset your winnings with losses. Starting in 2026, the OBBBA further limits loss deductions to 90 percent of winnings.
Is the sports betting tax rate the same in every state?
No. Each state sets its own income tax rules. Nine states have no income tax at all, meaning you only owe federal tax. Other states tax gambling winnings at rates ranging from about 3 percent to over 13 percent. Some states use flat rates while others have progressive brackets. Check our state-by-state sports betting tax guide for specifics.
How much can I win sports betting without paying taxes?
Legally, every dollar of gambling winnings is taxable. There is no minimum threshold below which you are exempt from reporting. The $600/300:1 W-2G threshold only determines when the sportsbook sends paperwork to the IRS. You are required to report and pay tax on all winnings regardless of the amount.
Do sportsbooks report my winnings to the IRS?
Sportsbooks report winnings that meet the W-2G threshold ($600 or more at 300:1 odds or greater). They send Form W-2G to both you and the IRS. However, sportsbooks do not report every winning bet. Even when no form is issued, you are still legally required to report the income on your tax return.
Can I deduct my sports betting losses?
Yes, but only if you itemize deductions on Schedule A. You can deduct gambling losses up to the amount of your gambling winnings for the year. You cannot claim a net gambling loss to reduce your other income. Starting in 2026, the OBBBA caps this deduction at 90 percent of winnings.
What happens if I do not report my sports betting winnings?
Failing to report gambling income is tax evasion, which can result in penalties, interest on unpaid taxes, and in serious cases, criminal prosecution. The IRS can cross-reference W-2G forms, bank deposits, and sportsbook records. Even if you did not receive a W-2G, the IRS may discover unreported income through audits or data matching.
Does the tax rate change based on how much I win?
Your marginal tax rate can increase as your total income rises. If your betting winnings push your total income into a higher bracket, the portion of income in that bracket is taxed at the higher rate. However, this only affects the dollars within the new bracket, not your entire income. Use our sports betting tax calculator to see how different winning amounts affect your tax bill.
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