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Gambling Tax Calculator 2026: Federal + State for All Formats
Last Updated: March 1, 2026
The OBBBA 90% loss cap, effective January 1, 2026, fundamentally changed gambling taxation for recreational bettors. Use the calculator below to estimate your combined federal and state gambling tax liability across sports betting, casino, poker, and other formats — and to understand how the new cap creates taxable phantom income.
Last Updated: March 2026
This is general information, not tax advice. Consult a qualified CPA for your specific situation.
Key Takeaways
- The OBBBA 90% cap means recreational gamblers can only deduct 90% of losses against winnings — creating phantom taxable income even for break-even or losing players.
- DFS and pick’em winnings are classified as “Other Income,” not gambling income, and are exempt from the OBBBA cap.
- Federal gambling tax rates range from 10% to 37% depending on total taxable income; 24% withholding applies to W-2G reported payouts.
- Nine states impose zero gambling tax (no state income tax); all other states tax winnings at their ordinary income rate.
- Professional gamblers filing on Schedule C remain exempt from the OBBBA 90% cap and can deduct 100% of losses plus business expenses.
How Does the OBBBA 90% Cap Create Phantom Income?
The cap produces taxable income even when a bettor breaks even or loses money over the year. A recreational sports bettor with $100,000 in documented wins and $100,000 in documented losses can only deduct $90,000 — leaving $10,000 as taxable income. At the 24% federal bracket, that is $2,400 in federal tax on zero net profit.
This applies to sports betting, online casino, and poker losses reported on Schedule A. It does not apply to DFS winnings, which are reported as Other Income on Schedule 1. Pick’em contest winnings follow the same Other Income classification.
Which Formats Does the OBBBA Cap Affect?
| Format | Tax Classification | OBBBA 90% Cap Applies? | Reporting Form |
|---|---|---|---|
| Sports betting | Gambling income | Yes | Schedule A / W-2G |
| Online casino | Gambling income | Yes | Schedule A / W-2G |
| Poker tournaments | Gambling income | Yes | Schedule A / W-2G |
| Classic DFS | Other Income | No | Schedule 1, Line 8z |
| Pick’em DFS | Other Income | No | Schedule 1, Line 8z |
| Prediction markets | Unsettled — see CPA | Depends on classification | Varies |
For a detailed breakdown of prediction market tax treatment — including whether the OBBBA cap applies — see our prediction market tax guide.
What Are the W-2G Thresholds by Game Type?
Sportsbooks and casinos issue W-2G forms for payouts exceeding specific thresholds. Receiving a W-2G means the IRS already knows about the payout.
| Game Type | W-2G Threshold (2026) | Withholding Rate |
|---|---|---|
| Sports betting | $600 and 300:1 odds | 24% federal |
| Slot machines | $1,200 | 24% federal |
| Keno | $1,500 | 24% federal |
| Poker tournaments | $5,000 (net) | 24% federal |
| Table games (blackjack, roulette) | Generally exempt | Varies |
| Bingo | $1,200 | 24% federal |
All gambling winnings are taxable regardless of whether a W-2G is issued. The $600 threshold for sports betting only triggers the form — it does not create or eliminate a tax obligation.
What Are the State Gambling Tax Rates?
State tax rates on gambling winnings apply in addition to federal taxes. Our dataset tracks legal gambling status across all 50 states. The table below covers selected states; use the calculator above for your specific state.
| State | Tax Rate | Allows Loss Deduction? |
|---|---|---|
| California | 1–13.3% | Yes |
| Illinois | 4.95% | No |
| New Jersey | 1.4–10.75% | Yes |
| New York | 4–10.9% | Yes |
| Ohio | 0–3.75% | No |
| Pennsylvania | 3.07% | No |
| No state tax | AK, FL, NV, NH, SD, TN, TX, WA, WY | N/A |
States that disallow loss deductions — Illinois, Ohio, Pennsylvania — face the harshest combined burden under OBBBA.
How Does Professional vs. Recreational Status Affect Taxes?
Professional gamblers report on Schedule C and are exempt from the 90% cap. They deduct 100% of losses plus business expenses against gambling income. The IRS evaluates professional status based on time invested, profit motive, and record-keeping.
Recreational bettors are subject to the OBBBA 90% cap. Track real-time odds across all major sportsbooks on the Odds Reference dashboard to improve your sports betting tax position.
FAQ
Q: What is the OBBBA 90% gambling loss cap?
A: The Online Betting and Bingo Benefits Act (OBBBA) caps recreational gambling loss deductions at 90% of gambling winnings, effective January 1, 2026. If you win $50,000 and lose $50,000 in the same year, you can only deduct $45,000 of losses — leaving $5,000 as taxable phantom income. The cap applies to sports betting, casino, and poker losses.
Q: Do DFS winnings count as gambling income?
A: No. The IRS has not classified DFS as gambling. Most tax professionals report DFS net winnings as “Other Income” on Schedule 1, Line 8z. This means the OBBBA 90% gambling loss cap does not apply to DFS, and DFS losses follow different deduction rules. Pick’em DFS is treated the same way. See our full DFS tax guide for details.
Q: Which states tax gambling winnings?
A: All states that impose an income tax also tax gambling winnings. Rates range from 2.5% in Arizona to 13.3% in California. Nine states have no income tax and therefore no state gambling tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Some states allow loss deductions; others do not.