There are two questions that beginner gamblers ask: Are online casinos rigged and how much can you cash out at a casino without taxes.

We have already prepared a guide for the answer to the first question and contains a list of safe online casinos. You can find the answer to the second question in this guide. But before we start, let’s clarify one thing: This is not a guide about how much can you cash out at a casino.

Likewise, we will not talk about how to cash out at a casino: We have different articles for both topics.

In this guide, we will talk about how much can you win at casino without paying taxes and, in particular, we will talk about the legal obligations of US players.

If you’re asking the “how much can I win before paying taxes” question, keep reading: We talk about everything you need to know below.

Top US online casinos [2021]

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Taxability of gambling income in the US

You can make a profit using different types of casino bonuses or by joining an online casino VIP program. Or you can win a jackpot while playing the best online slots. Who knows, maybe you get lucky at the hippodrome and win your bet.

Regardless of the source, if you are a US citizen, you must pay a tax on all gambling earnings. The IRS sees gambling winnings as “income” and applies a flat tax rate: 24%. This is not a progressive rate; i.e. the tax rate does not increase as the amount of earnings increases.

If your earnings are above the limits we will list below, you must pay a 24% federal tax.

Differences in the taxation of land-based and online casino winnings

The answer to the how much do you have to win to pay taxes question does not differ whether you gamble at physical casinos or online. If you make a profit from gambling, you will pay a tax in the US: It is that simple.

IRS asks you to pay the same tax rate for all kinds of gambling winnings.  However, a couple of states have different tax rates for online and land-based betting, which you can see in the table below.

How much money can you cash out at a casino without paying taxes?

Alright, we can now start talking about how much money can you win at casino without paying taxes. This is not “hard to find” information: The IRS website has a list and it shows how much money can you win at a casino before you have to pay taxes.

According to this list, whether you play at an online casino or a land-based casino, you need to pay a tax for winnings higher than these amounts:

Step 1
$1,200 or more in gambling winnings from bingo or slot machines
Step 2
$1,500 or more in winnings (reduced by the wager) from keno
Step 3
More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament
Step 4
$600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or,
Step 5
Any other gambling winnings subject to federal income tax withholding

Also, it is possible to deduct gambling losses, but you cannot deduct more than your winnings. Now, there are two more important things you need to know when it comes to how much money can you win gambling without paying taxes question:

  • If you are a professional gambler, these limits do not apply to you. In this case, the answer to how much can you win without paying taxes question is different. The IRS thinks that professional gambling is a “job” and it is subject to the regular income tax rates. In other words, you need to report all your winnings if you play casino games professionally, even if they are lower than these amounts.
  • If you are not a US citizen, you need to report all your gambling winnings (even if they are below these limits) and pay a flat 30% tax. In this case, you also need to use a special form called 1040NR.

Gambling taxes in the US: State by state

American players are not only liable to pay taxes to the IRS: Some states also have their own special gambling taxes. If you live in one of these states, you have to pay taxes to your state in addition to the IRS.

But there is a “trick”: Online gambling is largely illegal in the United States. In other words, the winnings you get from the top new casino or live dealer online casino sites are not considered as “legal income”.

Likewise, there are no online casino sites in the United States with a few exceptions (check our best casino payment methods and online casino guide for more information). This means:

  • Since your income from offshore casino sites is considered illegal, it will subject to income tax regulations, not gambling. In this regard, each state has a different practice and it is not possible to list them in this guide: We recommend that you consult a tax professional.
  • Some states have legalized online gambling to a limited extent. In these states, land-based and online sports betting are considered legal and each has a separate tax. The table below shows how much tax you should pay to your state in addition to the IRS if you make a profit from sports betting:

STATE NAME

TAX RATE

Arkansas
TAX RATE
13% of first 150 million USD income
Colorado
TAX RATE
10%
Delaware
TAX RATE
50%
Columbia
TAX RATE
10%
Illinois
TAX RATE
15%
Indiana
TAX RATE
9.5%
Iowa
TAX RATE
6.75%
Michigan
TAX RATE
8.74%
Mississippi
TAX RATE
12%
Nevada
TAX RATE
6.75%
New Hampshire
TAX RATE
51% for online, 50% for land-based betting
New Jersey
TAX RATE
13% for online, 8.5% for land-based betting
New York
TAX RATE
12% for online, 8.5% for land-based betting
Oregon
TAX RATE
2.3%
Pennsylvania
TAX RATE
34%
Tennessee
TAX RATE
20%
West Virginia
TAX RATE
10%

How to pay gambling taxes in the US?

Alert

This is actually quite easy: The gambling tax will be automatically deducted from the payout as soon as you make a profit. Let’s say you have won 10.000 USD from popular casino slot machines. Your payout won’t be 10.000 USD: The casino will deduct the tax automatically (*). The casino management will also give you a form called “W2-G” to report this winning to the IRS. If the casino has not provided you with this form (online casinos generally do not) your liability will remain: You can download a sample of the form from the official IRS website. Lastly, remember that “gambling winnings” include all kinds of gambling income, not just casino payouts. If you win a prize in horse racing, for example, you still need to fill out this form and deliver it to the IRS.

(*) Please note that this is not always the case: Sometimes, even some legit online casinos do not deduct the taxes automatically. If this is the case, you are required to pay the tax yourself, in addition to filling out the W2-G form.

Frequently Asked Questions about gambling taxation:

Lower than 1.200 USD for slots and bingo games, 1.500 USD for keno games, 5.000 USD for poker, and no matter what the game is, 600 USD and more if the payout is at least 300 times of the wager.
Gambling winnings must be reported in the same year as the winnings. So if you have won a prize in 2021, for example, you need to report it by the end of 2021. In this regard, they are yearly.
There is no “trick” to avoid taxes in the US, whether they are from gambling or any other source. Sure, you can simply not report the winning to the IRS but doing so will be a huge risk: The casino may still report the winning and you commit a crime.
No. The IRS can go back 6 years while making an audit (usually it is three years) but there is no law or rule that prevents it from going back even more. However, IRS collections stop after 10 years: It cannot collect a tax once ten years have passed.

Start playing casino games today and focus on winnings

You have learned how much can you cash out at a casino without taxes: If you live in the United States, there is no way of “bypassing” taxes on gambling income, so the best thing you can do is focusing on your winnings.

If you win big, you don’t mind paying taxes! So check our list of highest paying online casinos, pick one, and start playing the best online casino games to win money. And if you lose, don’t worry: We have a guide for how to recover lost money in casino too. As always, we wish you good luck!