The U.S. tax on all casino winnings is your usual income tax rate of 15% plus a 3% surcharge. The 3% surcharge was originally added to compensate for the tax rate for high earners, but in 2007 it was increased to 4% in order to help fund the Affordable Care Act (ACA).
If you win a jackpot, you’ll need to pay estimated taxes for that year and the next year, whether or not you actually take the money home. The IRS will send you a 1099-G every January showing how much you took home. You can use that amount as a baseline for your first year’s taxes. Then, when you cash out and buy a new car, drop a kid off at college, or move into your dream house, remember that you owe estimated taxes on the amount above that 1099-G figure. This can be quite confusing if you aren’t used to dealing with it—but once you get into the swing of things, it’s easy and straightforward.
If you win big in a Las Vegas casino, the casino will likely charge you a 20% tax on your winnings. This tax is known as the “Casino Winnings Tax” or “Vegas Winnings Tax.”
The Casino Winnings Tax is a federal tax (9 percent) and is charged to every winner who cashes out at a land-based casino. The tax is also charged to online gamblers who win money from any of the major online gambling sites.
The Las Vegas Winnings Tax is not like other taxes that you would pay on your income because it’s not based on how much money you make. Instead, it’s based solely on what you spend in the city of Las Vegas. So even if you don’t spend a single penny in Las Vegas, the Casino Winnings Tax will still be assessed to your winnings.
Casinos are always trying to make their players feel welcome, so they generally offer free food, drinks, and other amenities. However, these freebies may not always be free. You may be charged a tax on your winnings if you play at a U.S. casino. Depending on where you live, this tax can be as high as 30 percent. In addition to the federal government, some states also impose a tax on gambling winnings. So, if you plan to play at a different state’s casino, be sure to check its rules before you start playing.
The purpose of the casino winnings tax is to encourage gambling and keep people from losing all their money in one sitting. The main goal is not to raise revenue; it’s simply to make sure people are taking their winnings slow and steady so that they can avoid disaster.
The federal government charges a tax on most U.S. casino winnings, which is 10% of the amount you win above your base wager (i.e., how much you put up to play). There are some exceptions, however, including certain state lotteries and certain prizes from sweepstakes or raffles, among others.
Accordingly, if you win $100 playing slots at a Las Vegas casino, you’re subject to a $10 tax. And if you win $1 million at a slot machine in Atlantic City, New Jersey, you’ll owe the IRS $1 million plus an additional 10% tax on that total amount.
You may also not be able to deduct any gambling losses against your income. For example, if you lose $5 playing slots in Vegas and have no other taxable income or deductions that year, you can’t take off any amount for gambling losses that season.