Gambling winnings tax in 2026
Every gambling or lottery win is taxable income, reported on Form 1040 through Schedule 1 whether or not you receive a form. Three rules decide what you actually pay in 2026: the brackets, the withholding, and a new limit on deducting losses.
The brackets
Winnings are added to your other income and taxed at your marginal rates. For a large prize most of the money falls in the top bracket.
| Rate | Single: taxable income | Married filing jointly: taxable income |
|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 |
| 12% | $12,400 – $50,400 | $24,800 – $100,800 |
| 22% | $50,400 – $105,700 | $100,800 – $211,400 |
| 24% | $105,700 – $201,775 | $211,400 – $403,550 |
| 32% | $201,775 – $256,225 | $403,550 – $512,450 |
| 35% | $256,225 – $640,600 | $512,450 – $768,700 |
| 37% | over $640,600 | over $768,700 |
When you get a Form W-2G
The payer files a Form W-2G and gives you a copy when a win reaches the reporting threshold. For payments made in 2026 the minimum threshold is $2,000, adjusted for inflation in later years; for keno it is counted after the price of the winning game, and poker tournaments have their own, higher threshold, counted after the buy-in. For horse racing, jai alai and other wagers the win must also be at least 300 times the stake. A win below the threshold is still taxable.
Withholding: 24%
The payer keeps back 24% for the IRS when a win, minus the stake, is more than $5,000 from a lottery, sweepstakes or wagering pool, or from sports or parimutuel wagering that paid at least 300 times the stake. For a prize paid in goods rather than cash the rate is 31.58% of its value. Slots, keno and bingo have no regular withholding. If you do not give the payer your taxpayer identification number, 24% backup withholding can apply to any reportable win.
Withholding is only a prepayment. A $1,000,000 lottery prize to a single filer with no other income carries about $320,000 of federal tax, but only $240,000 is withheld; the remaining $80,000 or so is due with the return.
Losses: only 90% from 2026
From tax year 2026, section 165(d) of the tax code lets you deduct 90% of your gambling losses, and still no more than your winnings. Before, losses up to the winnings were deductible in full. Losses count only if you itemize on Schedule A, so they help only when your itemized deductions beat the standard deduction of $16,100 for a single filer or $32,200 for a married couple.
The effect is taxable income that was never received. A single filer with $60,000 of other income who won and lost $100,000 in the year pays about $5,092 of federal tax on the gambling in 2026, against $2,892 under the 2025 rule: $2,200 more on a year that ended even. Some of that tax existed before 2026 too, because itemizing the losses means giving up the standard deduction.
Questions
Are gambling winnings taxed differently from wages?
No. They are ordinary income at the same rates. What differs is the withholding and the limited deduction for losses.
Do professional gamblers get a better deal?
They report on Schedule C and can deduct business expenses, but from 2026 the 90% limit applies to their losses and expenses as well.
What records should I keep?
A diary of every session with the date, place, game and amounts won and lost, plus tickets, statements and Forms W-2G. The IRS can ask for them to support any losses you deduct.
Sources: IRS 2026 inflation adjustments; IRS Instructions for Forms W-2G and 5754 (01/2026); IRC 165(d) as amended in 2025. See the methodology. Not tax advice.
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