Horse racing winnings tax in Illinois
Illinois taxes horse racing winnings as ordinary income at a flat 4.95%.
Updated · 2026 tax rules · How we calculate
You keep
$6,494
Cash at payout
$5,684
Total tax
$1,506
Over-withheld
$810
- Form W-2G
- Yes
- Federal withholding at payout
- $1,920
- Federal tax on the winnings
- $1,110
- State tax
- $396
- Illinois withholding at payout
- $396
- Over-withheld
- $810
- You keep
- $6,494
$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.
Illinois taxes gambling winnings as ordinary income.
Illinois requires the payer to hold back 4.95% 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 $1,506 in federal and state tax: an effective rate of 18.8%.
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
- Illinois tax
- Illinois taxes horse racing winnings as ordinary income at a flat 4.95%.[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]
- Illinois withholding
- Illinois withholds 4.95% whenever federal tax is withheld.[5]
- Gambling losses
- Illinois allows no deduction for gambling losses, even if you itemize federally, so you're taxed on gross winnings.[6]
- Visitors
- Illinois 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 Illinois.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $74 | $1,246 |
| $2,000 | Yes | $0 | $240 | $99 | $1,661 |
| $8,000 | Yes | $2,316 | $1,110 | $396 | $6,494 |
| $10,000 | Yes | $2,895 | $1,550 | $495 | $7,955 |
| $100,000 | Yes | $28,950 | $22,114 | $4,950 | $72,936 |
Assumes a $2 bet amount, so the 300x test is met at every amount shown.
Questions
- How much is Illinois tax on horse racing winnings?
- Illinois taxes horse racing winnings as ordinary income at a flat 4.95%.[1]
- Does Illinois withhold tax from horse racing winnings?
- Illinois withholds 4.95% whenever federal tax is withheld.[5]
- Do visitors pay Illinois tax on horse racing winnings?
- Illinois taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[7]
More for Illinois
All of Illinois'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] Illinois DOR Pub-130: Withholding Illinois Income Tax for Lottery or Gambling Winnings · checked September 22, 2026
- [6] 2025 IL-1040 Schedule M Instructions · checked September 22, 2026
- [7] Illinois DOR Q&A: Do I have to pay income tax on gambling winnings if I already paid the tax in the state where I won? · checked September 22, 2026