Two thresholds control whether your sportsbook withholds taxes before paying you out. Federal withholding at 24% kicks in when winnings are $5,000 or more. Below that, the money hits your account untouched — but you still owe taxes on every dollar. The IRS doesn't care whether the book withheld anything. That's the part most bettors miss.
When does the sportsbook take 24% before paying me?
The trigger is simple: net winnings of $5,000 or more on a single wager. Hit that number and the book is legally required to withhold 24% and send it to the IRS on your behalf. You'll get a W-2G showing what was withheld. That withheld amount is a credit against your tax bill — not an extra tax. If you're in a lower bracket, you may get some of it back.
Under a 2026 rule update, a Form W-2G is also issued when winnings hit at least $2,000 AND the payout is at least 300x the wager. That catches long-shot parlays and futures. Short of those thresholds, no W-2G, no withholding — but the income is still fully taxable as ordinary income. Report it on Form 1040, Schedule 1, Line 8. For the full picture on federal reporting, see NHL Betting Taxes — What You Owe the IRS on Hockey Winnings.
Which states withhold at $600?
Three states set a much lower withholding threshold: Connecticut, Massachusetts, and Ohio withhold state income tax when winnings are $600 or more. If you're betting legally in any of those states, expect state tax withheld on a lot more of your payouts than federal rules would require. Other states have their own rules — or none at all. Always check current law for the state where you're physically placing bets. Legality by state is covered in detail at NHL Betting Legality by State — Where You Can Legally Wager in 2026.
Can I net my wins and losses to lower what I report?
No. Each wagering transaction must be reported separately. Netting all bets is not permitted by the IRS. You report total winnings as income, then — if you itemize — deduct losses on Schedule A. Gambling losses are deductible only up to the amount of winnings. They cannot offset wages, self-employment income, or anything else. And if you take the standard deduction, your losses are simply gone. That asymmetry hurts recreational bettors badly.
What records do I actually need?
The IRS recommends a diary of every wager: date, type of bet, odds, amount risked, amount won or lost, and the sportsbook. Your account statements back that up. Think about the moneyline bets, puck line plays, and over/unders you're placing — each one is a separate transaction in the IRS's eyes. Learn more about how those bet types work at NHL Bet Types: Moneyline, Puck Line, and Over/Under Explained. For everything related to documenting your action, see NHL Betting Tax Recordkeeping: Diaries, Statements, and Deductions.
What should I do right now?
- Download your sportsbook's transaction history at least monthly.
- Track every bet separately — not just net deposits and withdrawals.
- If you're in CT, MA, or OH, expect state withholding starting at $600.
- Set aside a portion of big wins before you spend them; withholding may not cover your full bracket rate.
- Talk to a tax professional if your annual winnings are significant.
Tax rules shift and state laws vary. Nothing here is legal or tax advice — consult a licensed professional for your situation. 21+. Gambling problem? Call 1-800-GAMBLER.