Sports Betting Taxes 2026: The New $2,000 W-2G Rule Explained

When you bet on sports and win, you have to report your gambling winnings to the Internal Revenue Service (IRS).

Many people use their sports knowledge and experience to make educated bets on gaming outcomes. Some of the most common types of sports betting include the moneyline, over/under, and point spread. However, with modern sportsbook apps, bettors can make any type of sports wager.

With the $2,000 threshold reporting requirement, your sports betting app must report your qualifying winnings. For reporting, the winnings (minus the wager) must be at least $2,000 and at least 300 times the amount of the wager. Your sports betting app can also withhold a percentage of your gambling tax over a certain amount ($5,000). Understand your tax reporting obligations to avoid a costly tax bill. For legal advice about sports betting taxes, talk to a local tax law attorney.

IRS Form W-2G for Certain Gambling Winnings

Form W-2G is a tax form for reporting gambling winnings and any federal income tax withheld from those winnings. The form will indicate the amount of gross winnings, date won, and type of wager. Bettors may receive multiple Form W-2Gs from different sports betting apps or online casinos.

Sports bet reporting and withholding requirements for W-2G reporting can depend on:

• The type of gambling
• Amount of gambling winnings
• Ratio of the winnings to the wager

For example, for sportsbook gambling activity, the party paying the winnings must file a Form W-2G if the winnings are at least $2,000 and at least 300 times the amount of the wager.

There are new rules for W-2G filing and reporting requirements for the calendar year 2026. The minimum threshold amount for payments made in calendar year 2026 is $2,000. For calendar years after 2026, the minimum reporting threshold amount will be adjusted annually for inflation.

When you get a Form W-2G, your reportable winnings are reported in Box 1. Box 2 indicates the date you won. Box 3 shows the type of wager and the amount of the wager. Box 4 shows the amount of federal income tax withheld. If you had state or local income tax withheld, it will show in Box 15 and Box 17.

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Tax Withholdings for Sports Betting Wins

The regular withholding rate for sports wagering winnings of $5,000 or more is 24%. This withholding rate also applies to sweepstakes, wagering pools, certain parimutuel pools, jai alai, and lotteries.

For example, you bet on the Super Bowl and win $6,000. The betting app could withhold $1,440 (24% of $6,000). Depending on your income and tax rate, you may be able to recover some of the withholdings when you file your taxes.

Many states also require withholding of state tax on gambling winnings. The withholding threshold and tax rate vary by state. Most states follow the federal withholding threshold ($5,000 or more). However, other states, including Connecticut, Massachusetts, and Ohio, have a lower withholding threshold ($600 or more). Check your state tax laws to make sure you avoid state tax penalties.

Do You Have to Report Gambling Winnings?

Under federal tax laws, you have to report any income from whatever source derived, including gambling income.

According to the IRS, gambling winnings are fully taxable. You must report gambling winnings as income on your federal income tax return. Gambling income includes winnings from lotteries, bingo, keno, sports betting, slot machines, horse racing, and casinos.

Even if you don’t receive a Form W-2G, you are still responsible for reporting your gambling income. Your reporting obligations may also extend to your state tax filings. Each state has its own tax laws and income tax rate. For questions about your state income tax requirements, talk to your tax professional or a tax lawyer.

Can You Deduct Gambling Losses From Winnings?

You can take a gambling loss deduction against your gambling winnings. However, as of tax year 2026, taxpayers can only deduct up to 90% of their gambling losses against gambling winnings. Prior to 2026, gamblers could deduct up to 100% of their winnings based on losses.

For example, you bet $100 on 10 NFL games during the regular season and lost each bet. Then you win $1,000 on the Super Bowl. Even though you lost $1,000 in regular-season bets, you can only subtract $900 from your $1,000 winnings. You have to pay income tax on the remaining $100.

Keep Track of Your Sports Betting Losses

Your betting app will not send you a W-2G for gambling losses. The form is only for gambling winnings. You are responsible for documenting your own sports betting losses.

Do not just make up gambling losses to offset your winnings. The IRS requires accurate recordkeeping for gambling winnings and losses. According to the IRS, “you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses.”

If the IRS audits your tax return based on suspicious gambling tax deductions, you could face costly tax penalties. If you do have sports betting losses, keep accurate records, including:

• Date and type of wager
• Where you made the bets
• Amount of wager
• Other persons present during the betting
• Amounts of winnings and losses
• Wager tickets, credit card statements, and other financial evidence of gambling losses

Report sports gambling deductions on your tax forms under “Other Itemized Deductions.” Make sure you check your state tax laws because some states do not allow deductions for gambling losses.

Income Tax Questions for Sports Betting Wins and Losses

When bettors win big, they usually aren’t thinking about their income tax filing. The IRS expects taxpayers to report sports betting winnings and to pay taxes on that income. If you don’t report the winnings, your sports betting app may send you a Form W-2G, withhold taxes, and report it to the tax authorities.

An experienced tax attorney can explain your filing obligations and identify tax deductions that can lower your overall tax bill. For tax questions about your sports betting wins and losses, talk to a local tax law attorney.