Sports betting winnings tax in Arizona
Arizona taxes sports betting winnings as ordinary income at a flat 2.5%.
On a $10,000 sports betting win, $2,650 is withheld at payout. The tax comes to $1,800 ($1,550 federal and $250 Arizona), and you get $850 back when you file, so you keep $8,200. 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
$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.
The rules
- Arizona tax
- Arizona taxes sports betting winnings as ordinary income at a flat 2.5%.[1]Unverified
- Federal tax form
- Sports betting winnings are reported on a W-2G when they are $2,000 or more (after subtracting the wager) and at least 300 times the wager. The threshold was $600 before 2026.[2]
- Federal withholding
- 24% is withheld from sports betting winnings of more than $5,000, but only when the win is also at least 300 times the wager.[2]
- Arizona withholding
- Arizona withholds 2.5% whenever federal tax is withheld.[5]
- 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.[6] How the federal 90% loss rule works
- Visitors
- Arizona taxes nonresidents on sports betting winnings won there, so visitors may need to file a nonresident return.[9]Unverified
- Where to play
- Sports betting in Arizona: legal online and in person. Winnings from a bet placed in another state are taxable here all the same.[10]
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 | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $38 | $1,283 |
| $2,000 | No | $0 | $240 | $50 | $1,710 |
| $10,000 | Yes | $2,650 | $1,550 | $250 | $8,200 |
| $100,000 | Yes | $26,500 | $22,114 | $2,500 | $75,386 |
Assumes a $25 stake on this bet, so the 300x test is met at every amount shown.
Records to keep for sports betting winnings
Winnings are your payout minus your stake. A W-2G also needs the win to be at least 300 times the stake, which in practice means a long-odds parlay or futures bet.
Losses only count if you can prove them. The IRS doesn't list records specific to sports betting, so its general gambling diary and the paperwork behind it are what count: keeping gambling records the IRS will accept.
Questions
- How much is Arizona tax on sports betting winnings?
- Arizona taxes sports betting winnings as ordinary income at a flat 2.5%.[1]Unverified
- Does Arizona withhold tax from sports betting winnings?
- Arizona withholds 2.5% whenever federal tax is withheld.[5]
- Do visitors pay Arizona tax on sports betting winnings?
- Arizona taxes nonresidents on sports betting winnings won there, so visitors may need to file a nonresident return.[9]Unverified
More for Arizona
All of Arizona's gambling tax rules · Sports betting in every state
Sources
- [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
- [2] IRS, Instructions for Forms W-2G and 5754 (01/2026) · checked September 22, 2026
- [3] Federal Register, REG-113229-25 proposed rule (Apr. 17, 2026) · checked September 22, 2026
- [4] 26 U.S. Code § 3402 (withholding) · checked September 22, 2026
- [5] A.R.S. 43-405 Extension of withholding to gambling winnings · checked September 22, 2026
- [6] A.R.S. § 43-1042, Itemized deductions · checked October 2, 2026
- [7] A.R.S. § 43-105, Internal revenue code; definition; application · checked October 2, 2026
- [8] Arizona DOR, 2025 Form 140 Instructions · checked October 2, 2026
- [9] ADOR Private Taxpayer Ruling LR99-012 (1999) · checked September 22, 2026
- [10] American Gaming Association, State of the States 2025 · checked September 22, 2026