California Gambling Taxes
You will need to pay tax on gambling winnings in California. The IRS treats gambling profits as taxable income, and you will also need to pay a graduated state income tax on any profits earned each year.
This page explains how to declare your gambling winnings in California. We will also discuss how to deduct gambling losses from your winnings, which can reduce or eliminate your tax liabilities.
California gambling tax calculator
Disclaimer: The tax calculator assumed a standard deduction of $13,850 (single) / $27,700 (married) and does not include any local or municipal taxes. This calculator is intended solely for general information and educational purposes. It is not intended in any way as financial, tax or legal advice It cannot be relied upon to determine the actual tax you owe to any federal, state or local tax authority. The results are an estimate only. The actual tax that you owe or any deduction you may be entitled to depend on your personal circumstances and you are responsible for seeking independent tax advice from a qualified individual. Catena Media and its Group Companies do not collect or save any information inputted into this calculator.
How to pay federal taxes on gambling in California
The IRS views gambling profits as an income stream. They must be added to any other income you earned over the course of the year, such as your salary, bonuses, tips, capital gains, dividends, and so on.
Your overall income and your marital status will then be used to determine the federal tax rate you must pay. These are the current brackets for the 2024 tax year.
Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
---|---|---|---|---|
10% | $0 – $11,600 | $0 – $23,200 | $0 – $11,600 | $0 – $16,550 |
12% | $11,600 – $47,150 | $23,200 – $94,300 | $11,600 – $47,150 | $16,550 – $63,100 |
22% | $47,150 – $100,525 | $94,300 – $201,050 | $47,150 – $100,525 | $63,100 – $100,500 |
24% | $100,525 – $191,950 | $201,050 – $383,900 | $100,525 – $191,950 | $100,500 – $191,950 |
32% | $191,950 – $243,725 | $383,900 – $487,450 | $191,950 – $243,725 | $191,950 – $243,700 |
35% | $243,725 – $609,350 | $487,450 – $731,200 | $231,251 – $365,600 | $243,700 – $609,350 |
37% | $609,350+ | $731,200+ | $365,600+ | $609,350+ |
If you win a substantial amount of money, the payer (a casino, cardroom, racetrack, etc.) is required under CA gambling law to withhold 24% of your winnings for tax purposes. These are the current thresholds at which a withholding tax should be taken:
- $1,200 or more (not reduced by your bet amount) from slot machines or bingo
- $1,500 or more (reduced by your wager amount) from keno
- $5,000 or more (reduced by the wager or buy-in) from a poker tournament
- $5,000 or more from lotteries, sweepstakes, or betting pools
- $600 or more from other types of gambling if the amount is at least 300 times the wager
For example, if you win $10,000, the payer should withhold $2,400 and pay you the remaining $7,600. The 24% withholding tax is simply an estimate of what you will owe when you file your tax return. You could get some or all of it back, or you may end up owing more.
The payer should also provide you with a Form W-2G when a withholding tax is taken. A copy of the form will be sent to the IRS, too. You can then attach any Form W-2G documents when filing your IRS return to show how much withholding tax you have already paid throughout the year.
Steps to take when you file
It is relatively simple to declare your gambling profits when you file your return, but make sure you enter the figures carefully and accurately. Follow these steps:
- Go to line 21 of Form 1040. On Schedule 1, there is an “Other Income” section.
- Enter details of any gambling winnings earned that year in this section. You can also highlight any withholding tax that you have already paid.
- Attach any Form W-2G to the return if you have received them. That will make it easy for the IRS to see the amount you have already paid in withholding tax. As mentioned above, you may get some of it back, get all of it back, or need to pay more.
- You can then deduct any losses from your winnings, if applicable. Make a note of any losses on line 27, Schedule A (Form 1040).
- Provide any evidence that backs up your losses, such as bank statements, credit card records, or losing tickets.
We have explained how to deduct losses from gambling winnings in the FAQ section further down this California gambling taxes guide.
How to pay state taxes on CA gambling winnings
Californians will also need to pay state income tax on any gambling profits, including sweepstakes casino taxes. The Golden State takes a similar approach to the federal government, as it has a progressive state income tax dependent on earnings and marital status.
Once again, your gambling profits will be added to all other income earned over the course of the year, and you will pay tax according to the bracket you end up in. Here are the current rates for the 2023/24 tax year, according to the California Franchise Tax Board.
Single filers:
Taxable Income | Tax Rate | Tax Owed |
---|---|---|
$0 to $10,412 | 1% | 1% of taxable income |
$10,413 to $24,684 | 2% | $104.12 plus 2% of the amount over $10,412 |
$24,685 to $38,959 | 4% | $389.56 plus 4% of the amount over $24,684 |
$38,960 to $54,081 | 6% | $960.56 plus 6% of the amount over $38,959 |
$54,082 to $68,350 | 8% | $1,867.88 plus 8% of the amount over $54,081 |
$68,351 to $349,137 | 9.3% | $3,009.40 plus 9.3% of the amount over $68,350 |
$349,138 to $418,961 | 10.3% | $29,122.59 plus 10.3% of the amount over $349,137 |
$418,962 to $698,271 | 11.3% | $36,314.46 plus 11.3% of the amount over $418,961 |
$698,272 or more | 12.3% | $67,876.49 plus 12.3% of the amount over $698,271 |
Married filing jointly:
Taxable Income | Tax Rate | Tax Owed |
---|---|---|
$0 to $20,824 | 1% | 1% of taxable income |
$20,825 to $49,368 | 2% | $208.24 plus 2% of the amount over $20,824 |
$49,369 to $77,918 | 4% | $779.12 plus 4% of the amount over $49,368 |
$77,919 to $108,162 | 6% | $1,921.12 plus 6% of the amount over $77,918 |
$108,163 to $136,700 | 8% | $3,735.76 plus 8% of the amount over $108,162 |
$136,701 to $698,274 | 9.3% | $6,018.80 plus 9.3% of the amount over $136,700 |
$698,275 to $837,922 | 10.3% | $58,245.18 plus 10.3% of the amount over $698,274 |
$837,923 to $1,396,542 | 11.3% | $72,628.92 plus 11.3% of the amount over $837,922 |
$1,369,543 or more | 12.3% | $135,752.98 plus 12.3% of the amount over $1,396,542 |
Head of household:
Taxable Income | Tax Rate | Tax Owed |
---|---|---|
$0 to $20,839 | 1% | 1% of taxable income |
$20,840 to $49,371 | 2% | $208.39 plus 2% of the amount over $20,839 |
$49,372 to $63,644 | 4% | $779.03 plus 4% of the amount over $49,371 |
$63,645 to $78,765 | 6% | $1,349.95 plus 6% of the amount over $63,644 |
$78,766 to $93,037 | 8% | $2,257.21 plus 8% of the amount over $78,765 |
$93,038 to $474,824 | 9.3% | $3,398.97 plus 9.3% of the amount over $93,037 |
$474,825 to $569,790 | 10.3% | $38,905.16 plus 10.3% of the amount over $474,824 |
$569,791 to $949,649 | 11.3% | $48,686.66 plus 11.3% of the amount over $569,790 |
$949,650 or more | 12.3% | $91,610.73 plus 12.3% of the amount over $949,649 |
Married filing separately:
Taxable Income | Tax Rate | Tax Owed |
---|---|---|
$0 to $10,412 | 1% | 1% of taxable income |
$10,413 to $24,684 | 2% | $104.12 plus 2% of the amount over $10,412 |
$24,685 to $38,959 | 4% | $389.56 plus 4% of the amount over $24,684 |
$38,960 to $54,081 | 6% | $960.56 plus 6% of the amount over $38,959 |
$54,082 to $68,350 | 8% | $1,867.88 plus 8% of the amount over $54,081 |
$68,351 to $349,137 | 9.3% | $3,009.40 plus 9.3% of the amount over $68,350 |
$349,138 to $418,961 | 10.3% | $29,122.59 plus 10.3% of the amount over $349,137 |
$418,962 to $698,271 | 11.3% | $36,314.46 plus 11.3% of the amount over $418,961 |
$698,272 or more | 12.3% | $67,876.49 plus 12.3% of the amount over $698,271 |
How to file
Your federal adjusted gross income determines your state income tax liabilities in California. That means you have already done the hard work when compiling your IRS return.
Simply declare your federal adjusted gross income when filling out Form 540, the standard California Resident Income Tax Return form. This figure will take into account any gambling winnings and losses and will be used to determine the state income tax you owe.
Are lottery winnings taxable?
You need to pay federal income tax on lottery winnings. Players can deduct gambling losses and expenses, such as the price of the lottery ticket, from your lottery winnings. Your profit will be added to all other income earned that year, and you will then pay tax according to the bracket you end up in.
However, Californians do not have to pay state income tax on lottery winnings. The CA Lottery will not withhold any state taxes from your winnings when you receive a prize.
You can complete a California Adjustments – Residents Form CA (540), which has an “Additional Income” section. Enter the amount you won in the “California lottery winnings” section. It will be subtracted from your overall income, ensuring you do not pay state income tax on your lottery winnings.
What if I win a lottery prize as part of a group?
You will still need to pay federal income tax if you win a lottery prize as part of a group in California. Fill out Form 5754, which will allow the CA Lottery or the Multi-State Lottery Association to determine precisely how much tax to withhold from each member of the group.
Each member will then receive an individual Form W-2G. You can then attach it to your IRS return to highlight the withholding tax you have paid.
CA gambling tax FAQ
Yes, Californians can deduct gambling losses from your winnings. That means you will only be required to pay state and federal income tax if you earn a profit from all gambling activities over the course of a particular year.
You cannot deduct gambling losses that exceed your winnings. For example, if you win $10,000 and lose $15,000, you can deduct $10,000. That means you will not need to pay tax on your gambling winnings, but you cannot deduct the remaining $5,000 from your other income.
If you intend to deduct gambling losses, you need to keep a meticulous record of your bets, wins, and losses. You will also need to supply evidence to back up your claims. Here are some examples:
- Attach a detailed log of each bet placed, the size of the bet, and the amount won or lost.
- Provide tickets, credit card statements, bank statements, or any other records that bolster your claims.
Keep in mind that you cannot deduct related expenses, such as the cost of an Uber to the casino or a meal at a casino resort. If anything needs to be clarified, consult a tax professional.
If you don’t receive a Form W-2G or lose it, you can contact the casino and ask for a replacement copy. Alternatively, just ask the IRS for a copy, as the payer will always send a copy to the IRS each time you receive a Form W-2G.
The IRS will receive a copy of each Form W-2G you receive, so it will know when you secure a substantial win. You will also leave a trail when gambling, especially if you are paid out electronically, so it is unwise to try to shield your winnings from the government.
There is also the risk of being audited if your lifestyle clearly exceeds the income you report when filing your tax return. For example, if you declare a modest income but live in a mansion, drive a sports car, and post pictures of lavish vacations on social media, the authorities may mount an investigation and discover your gambling winnings.
The California Department of Tax and Fee Administration will impose a 10% penalty if you fail to pay your full tax on time. A collection cost recovery may also be charged, and it will be assessed on past-due liabilities.
If you do not work with the state government to pay back the amount owed, the authorities will take collection action, which may result in additional fees. The Department of Tax and Fee Administration can levy your property, bank account, salary, or wages, revoke your driver’s license, and take various other actions if you don’t pay.
Meanwhile, the IRS can charge a 0.5% monthly failure to pay penalty, up to a maximum of 25% of the amount owed.
You will also be charged interest on overdue federal income tax. The rate is 3% above the federal short-term interest rate. For instance, if the interest rate is 4.25%, you will be charged 7.25%. Eventually, the IRS can take more drastic action, such as seizing your home, car, or bank balance, and it can also revoke your passport.
Resources used on this page
These are the resources that we used when compiling the information on this page:
- IRS – Gambling Income and Expenses
- IRS Schedule 1 (Form 1040)
- IRS Form 5754
- IRS Topic No. 419, Gambling Income and Losses
- IRS Publication 505, Tax Withholding and Estimated Tax
- IRS Failure to Pay Penalty
- California Franchise Tax Board – Gambling
- California Form 540
- California Adjustments – Residents Form CA (540)
- CDTFA – Trouble Paying Taxes?