Daily fantasy sports winnings tax in Arizona
Arizona taxes daily fantasy winnings as ordinary income at a flat 2.5%.
On a $5,000 daily fantasy win, nothing is withheld at payout. The tax comes to $725 ($600 federal and $125 Arizona), $725 of it due when you file, so you keep $4,275. That's for a single filer with $60,000 of other income and no gambling losses.
Updated · 2026 tax rules · How we calculate
You keep
$4,275
Cash at payout
$5,000
Total tax
$725
Due when you file
$725
- Form 1099-MISC
- Yes
- Federal withholding at payout
- $0
- Federal tax on the winnings
- $600
- State tax
- $125
- Still to pay when you file
- $725
- You keep
- $4,275
Daily fantasy sites report net winnings of $2,000 or more for the year on a 1099-MISC.
Daily fantasy sports winnings aren't subject to regular federal withholding, whatever the amount. Tax is still owed when you file. If you don't give the payer your Social Security number, 24% backup withholding applies.
Winnings are ordinary income stacked on your other $60,000. Your top dollar lands in the 12% bracket.
Arizona taxes gambling winnings as ordinary income.
Tax owed ($725) minus what was withheld ($0). Set this aside. A large balance can also mean an underpayment penalty unless you make an estimated payment.
$5,000 minus $725 in federal and state tax: an effective rate of 14.5%.
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.
The rules
- Arizona tax
- Arizona taxes daily fantasy winnings as ordinary income at a flat 2.5%.[1]Unverified
- Federal tax form
- Daily fantasy sites generally report net winnings of $2,000 or more for the year on Form 1099-MISC, not a W-2G. The 1099-MISC threshold was $600 before 2026.[2]Unverified
- Federal withholding
- Fantasy sites don't withhold federal tax from winnings in practice.[2]Unverified
- Arizona withholding
- Arizona withholds 2.5% whenever federal tax is withheld.[3]
- 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, and its itemized deductions follow the federal rules as of January 1, 2026, so the 90% limit applies.[4] How the federal 90% loss rule works
- Visitors
- Arizona taxes nonresidents on daily fantasy winnings won there, so visitors may need to file a nonresident return.[7]Unverified
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Arizona.
| Won | 1099-MISC | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $38 | $1,283 |
| $2,000 | Yes | $0 | $240 | $50 | $1,710 |
| $5,000 | Yes | $0 | $600 | $125 | $4,275 |
| $10,000 | Yes | $0 | $1,550 | $250 | $8,200 |
| $100,000 | Yes | $0 | $22,114 | $2,500 | $75,386 |
Records to keep for daily fantasy winnings
DFS sites report your net winnings for the year on Form 1099-MISC rather than a W-2G for each contest.
Losses only count if you can prove them. The IRS doesn't list records specific to daily fantasy, so its general gambling diary and the paperwork behind it are what count: keeping gambling records the IRS will accept.
IRS Chief Counsel has said DFS entry fees are wagers, so DFS losses fall under the gambling loss rules. Chief Counsel advice is not binding precedent.[8]
Questions
- How much is Arizona tax on daily fantasy winnings?
- Arizona taxes daily fantasy winnings as ordinary income at a flat 2.5%.[1]Unverified
- Does Arizona withhold tax from daily fantasy winnings?
- Arizona withholds 2.5% whenever federal tax is withheld.[3]
- Do visitors pay Arizona tax on daily fantasy winnings?
- Arizona taxes nonresidents on daily fantasy winnings won there, so visitors may need to file a nonresident return.[7]Unverified
More for Arizona
All of Arizona's gambling tax rules · Daily fantasy sports in every state
Sources
- [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
- [2] IRS, Instructions for Forms 1099-MISC and 1099-NEC (2026) · checked September 22, 2026
- [3] A.R.S. 43-405 Extension of withholding to gambling winnings · checked September 22, 2026
- [4] A.R.S. § 43-1042, Itemized deductions · checked October 2, 2026
- [5] A.R.S. § 43-105, Internal revenue code; definition; application · checked October 2, 2026
- [6] Arizona DOR, 2025 Form 140 Instructions · checked October 2, 2026
- [7] ADOR Private Taxpayer Ruling LR99-012 (1999) · checked September 22, 2026
- [8] IRS Chief Counsel Advice 202042015 (fantasy sports) · checked September 22, 2026