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WinningsTax

Kentucky gambling winnings tax calculator

Kentucky taxes gambling winnings as ordinary income at a flat 3.5%.

Updated · 2026 tax rules · How we calculate

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$
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More options
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You keep

$8,100

Cash at payout

$7,600

Total tax

$1,900

Over-withheld

$500

Form W-2G
Yes

$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.

Federal withholding at payout
$2,400

The payer holds back 24% of winnings over $5,000 and sends it to the IRS. It's a prepayment, not the final tax.

Federal tax on the winnings
$1,550

Winnings are ordinary income stacked on your other $60,000. Your top dollar lands in the 22% bracket.

State tax
$350

Kentucky taxes gambling winnings as ordinary income.

Over-withheld
$500

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.

You keep
$8,100

$10,000 minus $1,900 in federal and state tax: an effective rate of 19%.

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.

How Kentucky taxes gambling winnings

State income tax
Kentucky taxes gambling winnings as ordinary income at a flat 3.5%.[1]
Gambling losses
If you itemize, you can deduct wagering losses allowed under federal law, including the 90% limit, even though Kentucky disallows most other itemized deductions.[2] How the federal 90% loss rule works
Withholding
No Kentucky requirement for payers to withhold state tax from gambling winnings could be confirmed, so plan to pay Kentucky tax when you file.[3]Unverified
Nonresidents
Nonresidents are taxed on income from activities in Kentucky, which would include Kentucky Lottery prizes and in-state wagering.[4]Unverified
Tax paid to other states
Residents get a credit for income tax paid to another state on income from sources outside Kentucky, limited to the Kentucky tax on that income.[5]
Legal gambling
Sports betting: legal online and in person. State lottery: yes. Casinos: no. Online casino: not legal.[6]

Also worth knowing

  • KRS 141.019 disallows federal loss deductions except wagering losses allowed under IRC 165(d), so Kentucky itemizers can still deduct gambling losses.[2]
  • For 2026 Kentucky conforms to the Internal Revenue Code in effect December 31, 2025, so the One Big Beautiful Bill Act's 90% wagering-loss limit applies on the Kentucky return.[7]

Examples by game

For a single filer with $60,000 of other income and no gambling losses, living and winning in Kentucky. Kentucky ranks 17th of 51 for what you keep from a $10,000 sports bet, and 17th of 51 for a $1 million lottery prize. See every state ranked.

GameWonWithheldFederal taxState taxYou keep
Sports betting$10,000$2,400$1,550$350$8,100
Casino and slots$5,000$0$600$175$4,225
Table games$5,000$0$600$175$4,225
Poker tournaments$20,000$0$3,750$700$15,550
Lottery$50,000$12,000$10,350$1,750$37,900
Daily fantasy sports$5,000$0$600$175$4,225
Horse racing$8,000$1,920$1,110$280$6,610

Questions

Does Kentucky tax gambling winnings?
Yes, at a flat 3.5%.[1]
Can you deduct gambling losses in Kentucky?
If you itemize, you can deduct wagering losses allowed under federal law, including the 90% limit, even though Kentucky disallows most other itemized deductions.[2]
Does Kentucky withhold tax from gambling winnings?
No Kentucky requirement for payers to withhold state tax from gambling winnings could be confirmed, so plan to pay Kentucky tax when you file.[3]Unverified
Do nonresidents pay Kentucky tax on gambling winnings?
Nonresidents are taxed on income from activities in Kentucky, which would include Kentucky Lottery prizes and in-state wagering.[4]Unverified

Gambling across the border from Kentucky

Win in a neighboring state and both states can tax it: the state you won in as a visitor, and Kentucky as your home state, usually with a credit for the tax you paid there.

StateTop rateVisitors taxed
Illinois4.95%[1]Taxed[8]
Indiana2.95%[9]Taxed[10]
Missouri4.7%[1]Taxed[11]
Ohio2.75%[1]Some games[12]
TennesseeNo income tax[1]No
Virginia5.75%[1]Taxed[13]
West Virginia4.58%[14]Some games[15]Unverified

Sources

  1. [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
  2. [2] KRS 141.019 Calculation of adjusted gross income and net income (effective July 15, 2026) · checked September 22, 2026
  3. [3] KRS 154A.110 Prizes taxable -- Withholdings from prize · checked September 22, 2026
  4. [4] KRS 141.020 Levy of income tax on individuals · checked September 22, 2026
  5. [5] KRS 141.070 Credits allowed individuals for tax paid to other states · checked September 22, 2026
  6. [6] Covers, Legal sports betting in the US · checked September 22, 2026
  7. [7] KRS 141.010 Definitions · checked September 22, 2026
  8. [8] 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
  9. [9] Indiana DOR Departmental Notice #1 (2026) · checked September 22, 2026
  10. [10] Indiana IT-40PNR Booklet 2025 · checked September 22, 2026
  11. [11] RSMo 143.181 - Missouri source income of nonresidents · checked September 22, 2026
  12. [12] 2025 Ohio IT 1040 Instructions / IT NRC Line 4 · checked September 22, 2026
  13. [13] Va. Code § 58.1-302, Income and deductions from Virginia sources · checked September 22, 2026
  14. [14] West Virginia Tax Division, Personal Income Tax Reduction Bill · checked September 22, 2026
  15. [15] W. Va. Code § 11-21-32 · checked September 22, 2026
  16. [16] WV TSD 432, Gambling Withholding and Losses (Rev. June 2026) · checked September 22, 2026