Poker is a game of skill, strategy, and patience—but when the luck strikes, and you win big, the IRS expects its cut.
Whether you’re playing in a high-stakes poker tournament in Las Vegas or casually logging wins on a legal online poker platform, understanding how to handle your poker winnings and taxes is crucial.
We’ll cover everything from how to report gambling winnings to the forms you need, to the use of a gambling tax calculator like the one available at Jackpot Sounds. Let’s unpack how the IRS views your chips and cards.
Poker and the IRS: What’s Considered Taxable?
When it comes to poker, the IRS considers all winnings taxable income, whether it’s cash, a car, or a vacation in the Bahamas. If you win big at a poker tournament, that prize money is fully taxable and must be reported on your tax return. It doesn’t matter whether you’re a professional gambler or a weekend enthusiast—the law is the same.
According to U.S. tax law, taxes on gambling winnings apply to cash winnings, non-cash prizes, and even chips converted to cash.
Any gambling income you receive—whether from slot machines, sports betting, horse races, or a World Series of Poker table—is considered part of your total income for the tax year.
The Key IRS Forms: Understanding the W-2G
Casinos and tournament organizers are required to issue a Form W-2G for certain gambling winnings, typically when:
- You win $600 or more in a poker tournament (if the payout is at least 300x your wager),
- Or you receive a prize of at least $5,000 (minus your tournament fees).
This form will show the gross amount of your winnings and any taxes withheld (usually 24% for U.S. residents under federal income tax withholding regulations).
Even if you don’t receive a W-2G, you’re still required to report gambling winnings. The IRS doesn’t let you off the hook just because a form wasn’t issued. If you’re a U.S. taxpayer and don’t report gambling earnings, you could face penalties or audits.
How Much Tax Do You Pay on Poker Winnings?
Poker winnings are generally taxed at your applicable tax bracket. That means someone earning a higher income may owe more than a casual gambler with smaller annual profits.
There’s no flat tax rate for poker—your tax liability depends on how much you win and what tax bracket you fall into.
However, certain gambling winnings might have taxes withheld at a flat rate of 24% when reported via Form W-2G, especially when the casino winnings are significant. Still, this might not cover the full tax owed.
Come tax time, you’ll need to reconcile your estimated tax payments with your actual tax liability on your tax return.
But that’s only the federal side. Let’s break down how six key U.S. states—New Jersey, Pennsylvania, Michigan, West Virginia, Connecticut, and Delaware—handle taxes on poker winnings and gambling income more broadly.
Each state has different rules regarding taxable income, deducting gambling losses, and how residents must report gambling winnings.
New Jersey: Poker in the Garden State
New Jersey is home to a thriving poker scene, both online and in brick-and-mortar casinos like those in Atlantic City. The state considers gambling winnings taxable income, and residents are required to report all cash winnings, even if they don’t receive a W-2G.
- State Income Tax Rate: New Jersey has a progressive tax rate ranging from 1.4% to 10.75%, depending on your total income.
- Filing Requirements: All gambling winnings—including those from poker tournaments, slot machines, or sports betting—must be included on your NJ-1040 tax return.
- Nonresidents: If you’re a nonresident who wins big at a New Jersey casino, you’re still expected to pay taxes to New Jersey on those winnings.
- Withholding: While the state itself does not withhold taxes on poker winnings, players may still face federal income tax withholding.
You may not be able to deduct gambling losses for state tax purposes the way you can on your federal return, unless you are itemizing and only up to the amount of your gambling earnings.
Pennsylvania: Keystone State’s Strict Reporting
In Pennsylvania, gambling winnings and losses are treated seriously. The state taxes gambling income at a flat rate of 3.07%, and there is no threshold—you’re expected to report gambling winnings even if you win just $10.
- All Gambling Is Taxable: Whether you win from a poker tournament, a lottery ticket, or a wager at a licensed sportsbook, the amount is fully taxable.
- No Loss Deductions: Pennsylvania does not allow deductions for gamblinglosses, which can significantly impact professional gamblers who rely on offsetting high winnings.
- Form W-2G: Pennsylvania doesn’t require separate state-level W-2G reporting, but the IRS still does, and you must use the federal form when filing taxes.
- Nonresidents: If you’re from another state but play online poker in PA or visit one of its many casinos, your gambling winnings may still be taxed by Pennsylvania.
Keep in mind, Pennsylvania operates its own online poker ecosystem, so if you’re a resident using legal sites like PokerStars PA, all income earned there is considered taxable income.
Michigan: Online Poker and Tax Compliance
Michigan legalized online poker in 2021, making it one of the fastest-growing states for internet-based card play. The state expects its share of your success and considers gambling winnings part of your taxable income.
- Income Tax Rate: Michigan has a flat rate of 4.25% on all income, including gambling winnings.
- Filing: Michigan residents must include all poker winnings and other gambling activity on the MI-1040 tax form.
- Deducting Gambling Losses: Michigan allows you to deduct losses, but only up to the extent of your winnings, and only if you itemize.
- W-2G Reporting: Michigan adheres to federal thresholds for Form W-2G and uses this to track large wins.
For self-employed individuals who earn income solely or primarily through poker, Michigan may consider this other income for tax classification but still expects full reporting. Online poker earnings from sites like BetMGM Poker MI are just as fully taxable as winnings from a downtown Detroit casino.
West Virginia: Tax on Mountain State Winnings
West Virginia is part of the multi-state poker compact that includes New Jersey and Nevada, meaning players can compete across borders online. If you’re living in the Mountain State, your gambling earnings—whether online or in a casino—are subject to state tax.
- Tax Brackets: West Virginia’s state income tax ranges from 3% to 6.5% based on total income.
- W-2G and Reporting: Winnings that meet federal thresholds will be issued a Form W-2G, and you’re required to include all such income on your state tax return.
- Loss Deductions: The state permits taxpayers to deduct losses, but the rules closely follow federal standards—losses can only offset winnings, and you must maintain detailed records.
- Nonresident Rules: West Virginia requires nonresidents to report gambling winnings earned within state borders, including wagering pools and sports betting.
If you’re a professional gambler residing in WV, you’ll need to demonstrate consistency and intent to profit to claim that status—occasional wins won’t qualify for business treatment.
Connecticut: Taxes in the Constitution State
Although online poker is relatively new in Connecticut, the state still taxes gambling income from all sources. Whether you win big in a tribal casino like Mohegan Sun or online in the future, the state expects its due.
- Income Tax Rate: Connecticut uses a progressive scale ranging from 3% to 6.99% depending on your taxable income.
- Deducting Gambling Losses: Yes, but like the IRS, only up to the amount of your gambling winnings—and only if you itemize deductions.
- Tax Forms: Use CT-1040 to report both your winnings and losses.
- W-2G Filing: Tribal casinos may or may not issue W-2G depending on your win. Always check and retain your records.
While CT is still ramping up its digital poker offerings, it’s important for players to recognize that even non cash prizes and promotional rewards can be considered taxable income.
Delaware: Small State, Big Expectations
Delaware has long been a leader in online gambling and was one of the first to offer legal online poker. But with that innovation comes a clear tax responsibility.
- State Income Tax Rate: Ranges from 2.2% to 6.6% based on total income.
- Winnings Reporting: Delaware taxes all gambling winnings and requires them to be reported on your DE 200-01 tax return.
- Form W-2G: You’ll receive one for large wins, and the IRS requires you to report even if you don’t.
- Losses: Delaware mirrors federal law—you can deduct losses only if you itemize and only up to the value of your wins.
- Professional Gamblers: Delaware does allow those who qualify as professional gamblers to claim business expenses like travel expenses and entry fees, provided that poker is their actual profession.
Delaware also shares liquidity with other states via interstate poker agreements, so if you’re playing online in a multi-state tournament and win, those gambling winnings and losses will still need to be allocated appropriately on your return.
Deducting Gambling Losses (Yes, You Can)
One benefit for players: you can deduct gambling losses—but only if you itemize deductions.
You cannot deduct more than the amount of your gambling winnings, and all deductions must be well-documented. For tax purposes, gambling winnings and losses must be reported separately on your return, and keeping detailed records is key.
Your records should include:
- Date and type of gambling activity
- Location and name of the establishment
- Winnings and losses
- Supporting documents (receipts, tickets, statements)
Let’s say you won $10,000 at a poker tournament, but lost $4,000 over the year in other poker games. You’d report gambling winnings of $10,000 and could deduct losses of $4,000—reducing your taxable income by that amount.
Professional vs. Casual Gamblers
Are you a professional gambler? If poker is your actual profession, you may qualify to deduct job expenses and travel expenses, such as hotel stays for out-of-town tournaments. You’ll likely report your gambling activity on Schedule C (Profit or Loss from Business) instead of Schedule A.
But be careful—being classified as a professional gambler requires meeting specific IRS criteria. You must engage in poker regularly, pursue it for income, and treat it like a business. The IRS will look closely at your filing taxes if you go this route.
For casual gamblers, poker winnings go on Schedule 1 (Additional Income) of Form 1040, and losses—if any—are deductible only if you itemize.
Nonresident Aliens and Poker Winnings
If you’re a non-U.S. citizen playing poker in the States, nonresident aliens may face a flat tax rate of 30% on gambling income, unless a tax treaty reduces or eliminates this obligation. Always check your home country’s agreement with the U.S. for poker taxation terms.
Winnings in Kind: Prizes, Trips, and Cars
Did you win a new sports car in a celebrity charity poker match? That’s still considered taxable income, and the value of the prize—known as the fair market value—must be reported. Even non-cash prizes like vacations or electronics need to be evaluated for their dollar worth and claimed on your tax return.
This is where many players stumble. It’s easy to avoid paying taxes on a non-cash item you never sell, but the IRS requires you to report gambling winnings in any form.
How to Use the Gambling Tax Calculator at Jackpot Sounds
Figuring out how much you owe can be tricky, especially with changing tax brackets, potential taxes withheld, and a mix of gambling winnings and losses. That’s where the gambling tax calculator by Jackpot Sounds comes into play.
This free online tool allows you to:
- Enter your net gambling winnings for the year
- Select your filing status and estimated income tax bracket
- Add any gambling losses to determine your potential deduction
- Estimate tax payments or refunds
By using the gambling tax calculator at Jackpot Sounds, players can avoid nasty surprises in April and plan better during the tax year. It’s especially useful for self employed individuals or those who toggle between poker tournaments, sports betting, and slot machines.
Do You Need to Make Estimated Payments?
If poker is a significant part of your income earned, you may need to make estimated tax payments quarterly. This helps you avoid underpayment penalties at the end of the tax year.
The rule of thumb? If you expect to owe $1,000 or more when filing your tax return, it’s a good idea to pay estimated taxes throughout the year—especially if your gambling activity is frequent or high-stakes.
What Happens If You Don’t Report?
Failing to report your winnings and losses can lead to serious consequences. The IRS receives copies of your Form W-2G and uses automated systems to match them against your tax return. Mismatches can trigger audits, fines, and interest.
Even without a W-2G, you’re still legally required to report gambling winnings. Remember, poker earnings are other income, and it’s always better to be safe than face back taxes and penalties.
