California Gambling Winnings Tax Calculator: CA Gambling Tax Rules Explained
With efforts to legalize California sports betting growing over the last few years, it's important to understand that residents may have to pay taxes on certain amounts of money won.
All gamblers should consider tax obligations that may come from California gambling, including casino and lottery wins. We’ll answer some specific California gambling tax questions, as well as some questions on federal taxes.
California Gambling Tax Calculator
The Golden State does not have a tax on gambling winnings per se. Profits are simply treated as ordinary income. Players can use the tax calculator to see what bracket they fall in and whether they will need to actually pay taxes on the gains.
California taxes income on a graduated scale. Gambling winnings may push you into a higher bracket, but that impacts only the marginal extra income. That is the same as ordinary income gets treated.
Are Gambling Winnings Taxable in California?
Yes, gambling winnings are taxable in California. Players are obligated to report them on both their federal income tax returns and state tax return.
What are the Gambling Tax Rates in California?
California has a graduated income tax. Here are the 2023 rates for single residents or married residents that file separately:
- Up to $10,099 | 1%
- $10,100 to $23,942 | 2%
- $23,943 to $37,788 | 4%
- $37,789 to $52,455 | 6%
- $52,456 to $66,295 | 8%
- $66,296 to $338,639 | 9.3%
- $338,640 to $406,364 | 10.3%
- $406,365 to $677,275 | 11.3%
- Greater than $677,276 | 12.3%
And here are the rates for married couples filing joint returns:
- Up to $20,198 | 1%
- $20,199 to $47,884 | 2%
- $47,885 to $75,576 | 4%
- $75,577 to $104,910 | 6%
- $104,911 to $132,590 | 8%
- $132,591 to $677,278 | 9.3%
- $677,279 to $812,728 | 10.3%
- $812,729 to $1,354,550 | 11.3%
- Greater than $1,354,551 | 12.3%
How to Claim and Report California Gambling Winnings for Taxes
Any time you have significant gambling winnings in the state of California, the casino, track, card room or California sports betting apps, you are legally obligated to report it to the IRS. This generates a pre-filled document for the IRS known as Form W-2G which will list the winnings and whether you had to withhold income taxes, and if so, how much. It is important to save and file this form.
What to Do if You Do Not Receive a W-2G Form in California?
If you finish at the casino or card room or horse track with some gambling winnings above a certain thresholds, the establishment is required to report the results to the IRS. They are also obligated to give you a prefilled Form W-2G. The thresholds vary depending on the type of gambling winnings.
- Over $1,200 on bingo and/or slot machines
- Over $1,500 on Keno
- Over $5,000 Poker
- Over $600 or over 300 times the wager on other wagers
Gambling winnings are all considered taxable income, including those benefiting from California sports betting promos, so it is important to keep track even when the amounts do not exceed the thresholds. Form W-2G helps when reporting the gambling winnings to the IRS and state of California and it also clarifies any withholding. There is no requirement to actually file it. Whether Form W-2G is filled out or not, you are responsible for declaring the gambling winnings and any withholdings.
Can I Deduct Gambling Losses in California?
Gambling losses are deductible, but only against gambling winnings that are greater than the losses. Further, the losses must be itemized via Form 1040 Schedule 1. Both winnings and losses need to be itemized and reported separately as opposed to just reporting one net number. Only actually losses are deductible. Expenses associates with gambling, for example a hotel room for poker tournaments, are not deductible.
California Lottery Taxes
Golden State residents do not have to pay state taxes on California State Lottery winnings, but federal taxes are owed. Those winnings would go in as ordinary income and effectively get taxed at the federal tax rate of the winner.
How Are Group Lottery Wins Taxed in California
Many lottery players love to purchase multiple entries as groups. When one of these groups actually wins, the tax responsibilities simply revert to the individuals’ actual winnings. Again, California itself does not tax in-state lottery winnings, but everyone involved is responsible for reporting and paying federal taxes.
Taxes on Multi-State Lottery Wins
California, like almost every state participates in multi-state lottery’s such as PowerBall and MegaMillions. Only Arizona and Maryland require withholding on mulitstate lottery winnings. Outside of that, multistate lottery winnings will get treated the same as California State Lottry winnings in regards to state and federal taxes.
What Happens If I Don’t Report My Gambling Winnings?
Not reporting gambling winnings is akin to not reporting any form of income. It is a violation of both state and federal law and subject to penalties such as fines or in extreme cases, jail time.
Gambliing winnings effectively count as ordinary income for tax purposes. Lottery winnings do not get taxed on the California state level but are subject to federal taxes. We can not stress enough how important it is to follow all the filing guidelines.
California Gambling Tax Calculator FAQs
It is up to the individual to calculate gambling losses. Keeping good records, perhaps in the form of a journal is advised as it will make it easy to summarize any losses. Remember also that losses can ultimately only be deducted from gambling winnings for tax purposes. If the losses exceed the wins, they are not deductible vs ordinary income.
Establishments will provide an accounting of gambling winnings on Form W-2G. Beyond that, players are responsible for determining gambling winnings on their own. Keeping good records in a journal is highly recommended.
All gambling winnings are subject to California taxes. The actual tax rate depends on the income tax bracket of the individual and the marginal impact of the gambling winnings.
The best proof is copious documentation. The casino or card room or track will have records of the transactions as well.
Gambling winnings in California are taxable income. The actual rate depends on the tax bracket of the individual and the marginal impact on the appropriate bracket.
Players can deduct gambling losses, but only to the extent they offset total gambling winnings. If the losses exceed the wins, they can not be deducted against ordinary income.
Author
Adam Warner is the author of "Options Volatility Trading: Strategies for Profiting from Market Swings" former financial writer for Schaeffers Research, and freelance writer for Minyanville.com and StreetInsight.com. Previously Adam was a Market Maker on the American Stock Exchange and a graduate of Johns Hopkins University.
Cited by leading media organizations, such as:
