Arizona gambling winnings tax calculator
Arizona taxes gambling winnings as ordinary income at a flat 2.5%.
Updated · 2026 tax rules · How we calculate
You keep
$8,200
Cash at payout
$7,350
Total tax
$1,800
Over-withheld
$850
- Form W-2G
- Yes
- Federal withholding at payout
- $2,400
- Federal tax on the winnings
- $1,550
- State tax
- $250
- Arizona withholding at payout
- $250
- Over-withheld
- $850
- You keep
- $8,200
$10,000 is at or above the $2,000 reporting threshold, so the payer files a W-2G with the IRS and gives you a copy.
The payer holds back 24% of winnings over $5,000 and sends it to the IRS. It's a prepayment, not the final tax.
Winnings are ordinary income stacked on your other $60,000. Your top dollar lands in the 22% bracket.
Arizona taxes gambling winnings as ordinary income.
Arizona requires the payer to hold back 2.5% for state tax.
More was withheld than these winnings add to your tax. The difference reduces what you owe on the rest of your return, or comes back as a refund.
$10,000 minus $1,800 in federal and state tax: an effective rate of 18%.
An estimate for 2026, not tax advice. It treats this win as your only gambling income for the year and leaves out local income taxes. Nothing you enter leaves your browser.
How Arizona taxes gambling winnings
- State income tax
- Arizona taxes gambling winnings as ordinary income at a flat 2.5%.[1]Unverified
- Gambling losses
- You can deduct losses only as an Arizona itemized deduction, up to your winnings. Arizona lets you itemize even if you took the federal standard deduction.[2]Unverified
- Withholding
- The Arizona Lottery, racetracks, fantasy sports operators and sportsbooks withhold 2.5% whenever federal withholding applies, from residents and nonresidents alike. The law does not cover tribal casinos.[3]
- Nonresidents
- Partly. Nonresidents are taxed only on Arizona-source income, and a 1999 DOR ruling held that Arizona Lottery prizes paid to a nonresident are not Arizona-source. Other in-state winnings are treated here as taxable.[4]Unverified
- Tax paid to other states
- Yes. Form 309 gives residents a credit for tax paid to another state on the same income.[5]
- Legal gambling
- Sports betting: legal online and in person. State lottery: yes. Casinos: yes. Online casino: not legal.[6]
Also worth knowing
- Arizona lets you itemize on the state return even if you took the federal standard deduction, so you may be able to deduct gambling losses for Arizona when itemizing federally doesn't pay.[2]
- Arizona's withholding law (A.R.S. 43-405) names fantasy sports and sports-betting operators but not tribal casinos, which are the state's only casinos.[3]
- Nonresidents prorate itemized deductions, including gambling losses, by the ratio of Arizona income to federal AGI.[7]
Examples by game
For a single filer with $60,000 of other income and no gambling losses, living and winning in Arizona.
| Game | Won | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| Sports betting | $10,000 | $2,650 | $1,550 | $250 | $8,200 |
| Casino and slots | $5,000 | $0 | $600 | $125 | $4,275 |
| Table games | $5,000 | $0 | $600 | $125 | $4,275 |
| Poker tournaments | $20,000 | $0 | $3,750 | $500 | $15,750 |
| Lottery | $50,000 | $13,250 | $10,350 | $1,250 | $38,400 |
| Daily fantasy sports | $5,000 | $0 | $600 | $125 | $4,275 |
| Horse racing | $8,000 | $2,120 | $1,110 | $200 | $6,690 |
Questions
- Does Arizona tax gambling winnings?
- Yes, at a flat 2.5%.[1]Unverified
- Can you deduct gambling losses in Arizona?
- You can deduct losses only as an Arizona itemized deduction, up to your winnings. Arizona lets you itemize even if you took the federal standard deduction.[2]Unverified
- Does Arizona withhold tax from gambling winnings?
- The Arizona Lottery, racetracks, fantasy sports operators and sportsbooks withhold 2.5% whenever federal withholding applies, from residents and nonresidents alike. The law does not cover tribal casinos.[3]
- Do nonresidents pay Arizona tax on gambling winnings?
- Partly. Nonresidents are taxed only on Arizona-source income, and a 1999 DOR ruling held that Arizona Lottery prizes paid to a nonresident are not Arizona-source. Other in-state winnings are treated here as taxable.[4]Unverified
Arizona by game
Sources
- [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
- [2] Arizona Form 140 2025 Instructions (Itemized Deductions) · checked September 22, 2026
- [3] A.R.S. 43-405 Extension of withholding to gambling winnings · checked September 22, 2026
- [4] ADOR Private Taxpayer Ruling LR99-012 (1999) · checked September 22, 2026
- [5] Arizona Form 140 2025 Resident Booklet · checked September 22, 2026
- [6] American Gaming Association, State of the States 2025 · checked September 22, 2026
- [7] Arizona Form 140NR 2025 Nonresident Booklet · checked September 22, 2026