Betting winnings are taxable income in the United States, but state tax treatment is not the same everywhere.
There are three approaches to state-level taxation of betting wins:
States that withhold state income tax at payout
In these states, state tax may be deducted automatically from qualifying winnings.States that tax betting winnings but do not withhold at payout
In these states, no state tax is deducted when you are paid, but winnings may still need to be reported when filing taxes.States that do not tax betting winnings at state level
In these states, no state in
This article explains the difference clearly, so you know when tax is taken automatically — and when it isn’t.
Federal tax rules still apply nationwide. This article focuses on state tax only.
The Three Ways States Handle Betting Winnings
There are three distinct approaches taken by US states:
States that withhold state income tax at payout
States that tax betting winnings but do not withhold at payout
States that do not tax betting winnings at state level
Each is explained below.
States That Withhold State Tax at Payout
Some states require state income tax withholding when gambling winnings meet federal W-2G reporting thresholds, such as large pari-mutuel wins. State withholding rules vary by jurisdiction and are separate from federal tax requirements.
States Where State Withholding May Apply
Oregon
Connecticut (with important limitations, outlined below)
What This Means
In some states, state tax may be deducted from qualifying winnings at the time of payout. Where state withholding applies, it is governed by state law rather than by MyWinners.
State withholding rules do not apply uniformly across all customers or all winnings and should not be assumed to apply automatically.
Connecticut (CT) – Important Details
Connecticut follows the federal W-2G reporting framework for gambling winnings, but Connecticut state tax is not always withheld at the time of payout, even when federal withholding applies.
For Connecticut residents, gambling winnings are treated as taxable income and may be subject to Connecticut state income tax. In many cases, Connecticut tax obligations are settled when the customer files their Connecticut tax return rather than through automatic withholding at payout.
The commonly referenced 6.99% rate is Connecticut’s top marginal income tax rate, which applies based on total annual income at filing. It is not a flat or universal withholding rate and does not automatically apply to every gambling win.
Where applicable, tax is calculated on net winnings rather than the total payout, meaning the original stake is not taxed.
Whether Connecticut state withholding applies depends on individual circumstances and applicable Connecticut tax rules and should not be assumed based solely on residency, wager size, or betting channel.
NOTE: Customers are responsible for reporting gambling winnings on their Connecticut tax return as required. For questions about individual tax treatment or state withholding, customers should consult a qualified tax professional.
States That Tax Betting Winnings but Do NOT Withhold at Payout
These states do tax gambling winnings, but do not require operators to withhold state tax automatically when winnings are paid. Most states fall into this category.
What This Means
You receive the full payout
No state tax is deducted automatically
You may still be required to report winnings when filing your state tax return
Examples of States in This Category
(This is not an exhaustive list, but covers the majority of betting-legal states.)
Alabama
California
Colorado
Delaware
Idaho
Indiana
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Minnesota
Montana
Nebraska
New Hampshire
New Mexico
New York
North Dakota
Ohio
Oklahoma
Pennsylvania
Rhode Island
Vermont
West Virginia
Wisconsin
NOTE: No state withholding at payout does not mean the winnings are tax-free.
States That Do NOT Tax Betting Winnings at State Level
These states either:
Have no state income tax, or
Do not tax gambling winnings at state level
States That Do Not Tax Betting Winnings
Florida
Texas
Nevada
Washington
Wyoming
South Dakota
Tennessee
What This Means
No state tax applies to betting winnings
Federal tax rules still apply, where applicable
Key Things to Remember
Federal tax rules apply in all states
Only a small number of states withhold state tax at payout
Most states do not withhold, even though winnings may still be taxable
MyWinners applies state withholding only where required by law
Tax is calculated on winnings, not on the returned stake
💡 Did You Know? Most US states do not withhold state tax at payout, even though betting winnings may still be taxable income when you file your taxes.
Frequently Asked Questions
Why was state tax taken from one win but not another?
Why was state tax taken from one win but not another?
State withholding only applies in certain states and only when specific thresholds are met.
Why wasn’t state tax taken from my winnings?
Why wasn’t state tax taken from my winnings?
Most states do not require withholding at payout, even though winnings may still be taxable.
Does MyWinners decide when state tax is withheld?
Does MyWinners decide when state tax is withheld?
No. State tax withholding is applied only when required by law.
Does state tax replace federal tax rules?
Does state tax replace federal tax rules?
No. Federal and state tax rules are separate and may both apply. Federal tax rules apply nationwide. State tax rules depend on the state and may apply in addition to federal tax.
Do all states withhold state tax from betting winnings?
Do all states withhold state tax from betting winnings?
No. Most states do not withhold state tax at payout. Only a small number of states require state income tax to be withheld automatically when certain thresholds are met.
If my state doesn’t withhold tax, does that mean my winnings aren’t taxed?
If my state doesn’t withhold tax, does that mean my winnings aren’t taxed?
No. If your state does not withhold tax at payout, your winnings may still be taxable income and may need to be reported when you file your state tax return.
Is tax calculated on my full payout or just my winnings?
Is tax calculated on my full payout or just my winnings?
Tax is calculated on winnings only, not the full payout. Your original stake is returned to you and is not taxed.
How Can Connecticut Customers Access W-2G Tax Information?
How Can Connecticut Customers Access W-2G Tax Information?
Connecticut customers can access W-2G tax information through their MyWinners account on the website or mobile app. Telebet customers can also obtain this information by contacting Customer Support if needed.
How Can Telephone-Only Bettors Obtain W-2G Tax Forms in Connecticut?
How Can Telephone-Only Bettors Obtain W-2G Tax Forms in Connecticut?
Connecticut customers who place bets by telephone only can request W-2G tax forms by contacting Customer Support. Forms can be provided by email or sent by postal mail upon request.