Kentucky gambling winnings tax calculator
Kentucky taxes gambling winnings as ordinary income at a flat 3.5%.
Updated · 2026 tax rules · How we calculate
You keep
$8,100
Cash at payout
$7,600
Total tax
$1,900
Over-withheld
$500
- Form W-2G
- Yes
- Federal withholding at payout
- $2,400
- Federal tax on the winnings
- $1,550
- State tax
- $350
- Over-withheld
- $500
- You keep
- $8,100
$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.
Kentucky 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.
$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]
- 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.
| Game | Won | Withheld | Federal tax | State tax | You 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
Kentucky by game
Sources
- [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
- [2] KRS 141.019 Calculation of adjusted gross income and net income (effective July 15, 2026) · checked September 22, 2026
- [3] KRS 154A.110 Prizes taxable -- Withholdings from prize · checked September 22, 2026
- [4] KRS 141.020 Levy of income tax on individuals · checked September 22, 2026
- [5] KRS 141.070 Credits allowed individuals for tax paid to other states · checked September 22, 2026
- [6] Covers, Legal sports betting in the US · checked September 22, 2026
- [7] KRS 141.010 Definitions · checked September 22, 2026