Is gambling income taxable?

The rule in one paragraph

Pub. 17 says you must include your gambling winnings in income on Schedule 1 (Form 1040), line 8b. Winnings from fantasy sports leagues are gambling winnings. Winnings from lotteries and raffles are gambling winnings too. When the prize is not cash, you include the fair market value of bonds, cars, houses, and other noncash prizes. If you are in the trade or business of gambling, you use Schedule C instead. This rule applies whether or not you got a tax form; a casino that does not issue a Form W-2G has not made the winnings tax free.

Losses: the part most people get wrong

You must report the full amount of your winnings, and you may not reduce them by your losses and report the difference. Pub. 17 is explicit about this: you deduct gambling losses as an itemized deduction on Schedule A (Form 1040), line 16, and you cannot deduct losses that are more than your winnings. Two consequences follow. First, if you take the standard deduction, your gambling losses give you no tax benefit at all, but the winnings are still fully taxable. Second, a year in which you lost more than you won produces no deduction for the excess.

Because winnings and losses are reported on different lines, your records must show them separately. Pub. 17 tells you to keep an accurate diary or similar record, with at least the date and type of each wager, the name and address or location of the gambling establishment, the names of other people with you, and the amounts you won or lost. Pub. 529 has the detail.

Withholding and Form W-2G

Income tax is withheld at a flat 24% rate from certain gambling winnings of more than $5,000 from a sweepstakes, a wagering pool (including payments to winners of poker tournaments), or a lottery. Withholding also applies to any other wager if the proceeds are at least 300 times the amount of the bet. It does not matter whether the winnings are paid in cash, in property, or as an annuity; winnings not paid in cash are taken at fair market value.

The exception is bingo, keno and slot machines. Those winnings are generally not subject to income tax withholding, although you may need to give the payer your Social Security number to avoid backup withholding. When tax is withheld you should receive a Form W-2G, Certain Gambling Winnings. Include box 1 on Schedule 1, line 8b, and the amount in box 4 on Form 1040, line 25c, as federal income tax withheld. If winnings are not subject to withholding, you may need to pay estimated tax, and an underpayment penalty can apply.

Worked examples

You win $12,000 in a state lottery and the lottery withholds 24%, which is $2,880, and sends you a Form W-2G. You report $12,000 on Schedule 1, line 8b, and claim $2,880 on line 25c. You also lost $9,000 on other wagers during the year. If you itemize, you deduct $9,000 on Schedule A, line 16. If you take the standard deduction, you deduct nothing, even though you net only $3,000 at the table.

Change the facts: $12,000 of slot machine winnings and $15,000 of slot losses. Nothing is withheld, because slot winnings are generally excluded from withholding. You still report $12,000. If you itemize, you can deduct at most $12,000 of the $15,000, and the other $3,000 is lost for tax purposes. The calculator above runs these cases with your numbers.

When 24% is not the whole bill

The flat 24% is a withholding rate, not the final tax. Your gambling income is added to your other income and taxed at your regular rates, so a high earner may owe more than was withheld and a low earner may get some back. Add your total to the federal tax brackets or use the gambling winnings tax calculator to see the effect. A large win can also push you into a higher bracket for the entire year, which is why the order of reporting does not change the total.

Limits and tips

This page covers the federal rules in Pub. 17. State tax on winnings, and the treatment of professional gamblers, are separate matters. Pub. 17 also points readers to the Pub. 525 discussion of lottery prizes payable in installments. Keep wager records, Form W-2G, and statements from the casino or lottery together, and compare itemizing with the standard deduction in the standard vs itemized calculator before assuming your losses will help. If a big win is not subject to withholding, look at the estimated tax dates.

Sources

• IRS Publication 17, Your Federal Income Tax (2025): Gambling winnings under Miscellaneous Income (chapter 8); Gambling Losses up to the Amount of Gambling Winnings (chapter 12); Gambling Winnings and Form W-2G under Tax Withholding (chapter 4). Read November 2, 2026.

Edition read: Publication 17 (2025), Your Federal Income Tax, for use in preparing 2025 returns. Dollar limits and dates are for the 2025 tax year unless the text says otherwise; check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it.