Sports betting winnings tax in Iowa
Iowa taxes sports betting winnings as ordinary income at a flat 3.8%.
Updated · 2026 tax rules · How we calculate
You keep
$8,070
Cash at payout
$7,220
Total tax
$1,930
Over-withheld
$850
- Form W-2G
- Yes
- Federal withholding at payout
- $2,400
- Federal tax on the winnings
- $1,550
- State tax
- $380
- Iowa withholding at payout
- $380
- Over-withheld
- $850
- You keep
- $8,070
$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.
Iowa taxes gambling winnings as ordinary income.
Iowa requires the payer to hold back 3.8% 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 $1,930 in federal and state tax: an effective rate of 19.3%.
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
- Iowa tax
- Iowa taxes sports betting winnings as ordinary income at a flat 3.8%.[1]
- 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]
- Iowa withholding
- Iowa withholds 3.8% whenever federal tax is withheld.[5]
- Gambling losses
- Iowa starts from federal taxable income, so gambling losses lower your Iowa tax only if you itemize them federally, with the federal 90% limit.[6]
- Visitors
- Iowa taxes nonresidents on sports betting winnings won there, so visitors may need to file a nonresident return.[7]
- Where to play
- Sports betting in Iowa: legal online and in person. Winnings from a bet placed in another state are taxable here all the same.[8]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Iowa.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $57 | $1,263 |
| $2,000 | No | $0 | $240 | $76 | $1,684 |
| $10,000 | Yes | $2,780 | $1,550 | $380 | $8,070 |
| $100,000 | Yes | $27,800 | $22,114 | $3,800 | $74,086 |
Assumes a $25 stake on this bet, so the 300x test is met at every amount shown.
Questions
- How much is Iowa tax on sports betting winnings?
- Iowa taxes sports betting winnings as ordinary income at a flat 3.8%.[1]
- Does Iowa withhold tax from sports betting winnings?
- Iowa withholds 3.8% whenever federal tax is withheld.[5]
- Do visitors pay Iowa tax on sports betting winnings?
- Iowa taxes nonresidents on sports betting winnings won there, so visitors may need to file a nonresident return.[7]
More for Iowa
All of Iowa'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] Iowa DOR: Iowa Withholding Tax Information · checked September 22, 2026
- [6] Iowa DOR IA 1040 Expanded Instructions, Intro 4: Conformity with the Internal Revenue Code · checked September 22, 2026
- [7] Iowa DOR: Iowa Tax On Gambling · checked September 22, 2026
- [8] Covers, Legal sports betting in the US · checked September 22, 2026