Horse racing winnings tax in Kentucky
Kentucky taxes horse racing winnings as ordinary income at a flat 3.5%.
Updated · 2026 tax rules · How we calculate
You keep
$6,610
Cash at payout
$6,080
Total tax
$1,390
Over-withheld
$530
- Form W-2G
- Yes
- Federal withholding at payout
- $1,920
- Federal tax on the winnings
- $1,110
- State tax
- $280
- Over-withheld
- $530
- You keep
- $6,610
$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.
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.
$8,000 minus $1,390 in federal and state tax: an effective rate of 17.4%.
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
- Kentucky tax
- Kentucky taxes horse racing winnings as ordinary income at a flat 3.5%.[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]
- Kentucky withholding
- No Kentucky withholding requirement for horse racing winnings. Tax is due when you file.[5]Unverified
- 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.[6]
- Visitors
- Kentucky taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[7]Unverified
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Kentucky.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $53 | $1,268 |
| $2,000 | Yes | $0 | $240 | $70 | $1,690 |
| $8,000 | Yes | $1,920 | $1,110 | $280 | $6,610 |
| $10,000 | Yes | $2,400 | $1,550 | $350 | $8,100 |
| $100,000 | Yes | $24,000 | $22,114 | $3,500 | $74,386 |
Assumes a $2 bet amount, so the 300x test is met at every amount shown.
Questions
- How much is Kentucky tax on horse racing winnings?
- Kentucky taxes horse racing winnings as ordinary income at a flat 3.5%.[1]
- Does Kentucky withhold tax from horse racing winnings?
- Kentucky has no withholding requirement for horse racing winnings. Tax is due when you file.[5]Unverified
- Do visitors pay Kentucky tax on horse racing winnings?
- Kentucky taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[7]Unverified
More for Kentucky
All of Kentucky'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] KRS 154A.110 Prizes taxable -- Withholdings from prize · checked September 22, 2026
- [6] KRS 141.019 Calculation of adjusted gross income and net income (effective July 15, 2026) · checked September 22, 2026
- [7] KRS 141.020 Levy of income tax on individuals · checked September 22, 2026