Horse racing winnings tax in Colorado
Colorado taxes horse racing winnings as ordinary income at a flat 4.4%.
Updated · 2026 tax rules · How we calculate
You keep
$6,538
Cash at payout
$5,760
Total tax
$1,462
Over-withheld
$778
- Form W-2G
- Yes
- Federal withholding at payout
- $1,920
- Federal tax on the winnings
- $1,110
- State tax
- $352
- Colorado withholding at payout
- $320
- Over-withheld
- $778
- You keep
- $6,538
$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.
Colorado taxes gambling winnings as ordinary income.
Colorado requires the payer to hold back 4% 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.
$8,000 minus $1,462 in federal and state tax: an effective rate of 18.3%.
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
- Colorado tax
- Colorado taxes horse racing winnings as ordinary income at a flat 4.4%.[1]
- 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]
- Colorado withholding
- Colorado withholds 4% whenever federal tax is withheld.[5]
- Gambling losses
- Losses reduce Colorado tax only through your federal itemized deductions. Colorado has no separate gambling-loss deduction.[6]
- Visitors
- Colorado taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[7]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Colorado.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $66 | $1,254 |
| $2,000 | Yes | $0 | $240 | $88 | $1,672 |
| $8,000 | Yes | $2,240 | $1,110 | $352 | $6,538 |
| $10,000 | Yes | $2,800 | $1,550 | $440 | $8,010 |
| $100,000 | Yes | $28,000 | $22,114 | $4,400 | $73,486 |
Assumes a $2 bet amount, so the 300x test is met at every amount shown.
Questions
- How much is Colorado tax on horse racing winnings?
- Colorado taxes horse racing winnings as ordinary income at a flat 4.4%.[1]
- Does Colorado withhold tax from horse racing winnings?
- Colorado withholds 4% whenever federal tax is withheld.[5]
- Do visitors pay Colorado tax on horse racing winnings?
- Colorado taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[7]
More for Colorado
All of Colorado's gambling tax rules · Horse racing 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] Colorado DOR Withholding Tax Topics: Gambling Winnings · checked September 22, 2026
- [6] Colorado DOR Individual Income Tax Guide · checked September 22, 2026
- [7] Colorado DOR Income Tax Topics: Part-Year Residents & Nonresidents · checked September 22, 2026