Horse racing winnings tax in California
California taxes horse racing winnings as ordinary income at graduated rates from 1% to 13.3%.
Updated · 2026 tax rules · How we calculate
You keep
$6,315
Cash at payout
$6,080
Total tax
$1,685
Over-withheld
$235
- Form W-2G
- Yes
- Federal withholding at payout
- $1,920
- Federal tax on the winnings
- $1,110
- State tax
- $575
- Over-withheld
- $235
- You keep
- $6,315
$8,000 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.
California taxes gambling winnings as ordinary income.
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.
$8,000 minus $1,685 in federal and state tax: an effective rate of 21.1%.
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
- California tax
- California taxes horse racing winnings as ordinary income at graduated rates from 1% to 13.3%.[1]Unverified
- Federal tax form
- Horse racing (pari-mutuel) 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 pari-mutuel winnings of more than $5,000, but only when the win is also at least 300 times the wager.[2]
- California withholding
- California withholds 7% for nonresidents on horse racing winnings over $1,500.[5]
- Gambling losses
- You can deduct losses as a California itemized deduction, up to your winnings. Losses on California Lottery tickets are not deductible.[6]
- Visitors
- California taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[5]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in California.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $90 | $1,230 |
| $2,000 | Yes | $0 | $240 | $120 | $1,640 |
| $8,000 | Yes | $1,920 | $1,110 | $575 | $6,315 |
| $10,000 | Yes | $2,400 | $1,550 | $735 | $7,715 |
| $100,000 | Yes | $24,000 | $22,114 | $8,995 | $68,891 |
Assumes a $2 bet amount, so the 300x test is met at every amount shown.
Questions
- How much is California tax on horse racing winnings?
- California taxes horse racing winnings as ordinary income at graduated rates from 1% to 13.3%.[1]Unverified
- Does California withhold tax from horse racing winnings?
- California withholds 7% for nonresidents on horse racing winnings over $1,500.[5]
- Do visitors pay California tax on horse racing winnings?
- California taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[5]
More for California
All of California's gambling tax rules · Horse racing in every state
Sources
- [1] FTB, 2025 California Form 540 Booklet (Tax Rate Schedules) · 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] FTB - Withholding on nonresidents · checked September 22, 2026
- [6] FTB - Gambling · checked September 22, 2026