Skip to content

NJ gambling tax rate: What do you need to know?

Written by
Checked by Lorella F.Anna Marie G.

Winnings in NJ are subject to NJ gambling taxes, so if you’re on this page, we’re going to assume you’ve won something — congratulations!

New Jersey gambling tax is the price you pay for a regulated market; horse racing, casino, sports betting, and more are all legal in the Garden State and are audited for fairness.

This page tells you all you need to know to ensure your winnings are safe and compliant with all the legal requirements. 

We’ll start by highlighting the different NJ gambling tax rates on different types of gambling and even tell you what forms you need to fill out and how to pay taxes on your winnings. Let’s dive right in.

Is the NJ winnings tax rate different for each type of gambling?

There are minor differences in certain circumstances, but on the whole, not really. Generally, you’re faced with the federal rate on gambling winnings, which is set at 24%, and your winnings will also be subject to New Jersey income tax, which is set at 3%. 

It’s a little different for the lottery — we’ll break it down below.

For the most part, NJ gambling taxes on winnings are withheld automatically, but there are thresholds at which you should receive a federal tax form called a W-2G. Its purpose is so that New Jersey casinos and racetracks can report significant wins to the IRS, and they’re required by law to do so.

You’ll receive a W-2G from the organization you won money from (casino, sports betting, lottery operator, etc.), and they’ll send another copy to the IRS.

Let’s break it down:

Nj Gambling Taxes Lottery
Type 1

Lottery

Unlike most other forms, the lottery is subject to its own NJ gambling tax rate. The size of your win determines the rate of withheld winnings. You’ll still be subject to the 3% New Jersey income tax rate on top of everything else. Taxable wins are ones of over $10,000. Lottery payouts of $10,001 to $500,000 are taxed at 5%, and anything above $500,000 is taxed at 8%. Wins under $500,000 are also taxed at 8% if you fail to provide a valid Taxpayer Identification Number. Taxes are calculated on the size of the prize, so if you win $9,000 twice in the same year, you won’t have to pay tax, even though your winnings exceed $10,000. Conversely, if you and someone else win a $15,000 prize, you’ll still be taxed 5% on it, even though your share ($7,500) would be under $10,000. You’d receive a W-2G form for wins of over $600 if the win is over 300x your wagered amount.

New Jersey Casino Taxes
Type 2

Casino winnings

The New Jersey gambling winnings tax for casinos is just the standard 24% federal tax + the 3% income tax. You’ll receive a W-2G form for wins of over $1,200 on slots and over $5,000 on poker tournaments (minus the buy-in costs). Casinos are not expected to send a W-2G for table game winnings, but you’re expected to keep track of your winnings and report them to the IRS anyway.

american-football-on-top-of-cash-pile
Type 3

Sports wagering wins

Sports betting taxes in NJ are, again, standard stuff. Expect to pay your 24% federal and 3% NJ income taxes. For WG-2s, you’ll receive them if you receive 300x or more on your wager, starting at $600 for a $2 bet. The New Jersey sports betting tax rate also applies to horse racing, including pari-mutuel.

Nj Gambling Taxes Other
Type 4

Others

Other New Jersey gambling tax requirements don’t deviate from the 24% + 3% mentioned above. For more information on when to expect a W-2G form for other popular forms of gambling, it’s $1,200 for bingo and  $1,500 for Keno. 

NJ gambling tax calculator — a summary

Now that all the information’s explained, we’ll summarize the NJ gambling tax situation into one quick-fire table.

VertivalGambling tax rateIncome tax rate (NJ)Winnings threshold for W-2G
Lottery (Under $10,000)N/AN/AN/A
Lottery ($500,000+)8%N/AN/A
Slots24%3%$1,200
Keno24%3%$1,500
Bingo24%3%$1,200
Sports betting24%3%$600, 300x wager
Pari-mutuel24%3%$600, 300x wager
Poker tournaments24%3%$5,000 (minus buy-in costs)

How to pay taxes on gambling winnings 

Winnings are fully taxable, whether you’re a professional or casual gambler. Most winnings are cash, but if you win prizes such as cars or vacations, you’re expected to file tax on their fair market value. This section gives you a primer of info to get you started with sorting out your New Jersey gambling tax and making sure all your winnings are compliant with the law.

Depending on how much you’ve won, you might want to consider working with an accountant or financial professional.

  1. Make sure the organization paying you has your information — This is most important for casinos and sportsbooks, especially offline ones. Online ones usually have all your info before you can make a bet. Casinos and sportsbooks will likely ask you for your ID and SSN before they pay out any money. They’ll require this info to put it all up in W-9, which will help them withhold applicable taxes and send you any additional tax forms you need.

  2. Check who needs to pay the IRS — If you win big, usually over $5,000, the gambling retailer will usually withhold taxes automatically and pay the 24% federal tax to the IRS for you. That means the only New Jersey gambling tax you need to worry about will be your income tax, factoring in your winnings. No matter how much you win, keep track of wins and losses; you’ll need them to fill out tax forms anyway.

  3. Wait for your W-2G form — If you’ve won enough money to qualify for a W-2G form, your next step is to wait for it to come by. Its purpose is to act as proof of taxes paid and to help you fill out your 1040 for tax returns. You can check whether you should qualify for a W-2G on our table. If you qualify but don’t receive one, inform your casino, sportsbook, or another payer ASAP.

  4. Fill out Form 1040 — Keep track of your wins and losses with your W-2G, along with physical and digital receipts, depending on whether you’ve gambled online or retail. File your tax info on a 1040 under ‘other income’. Optionally, you can use tax software for an easier time. The standard form to fill out would be a Form 1040 — Schedule 1. If you’re over 65, opt for a 1040-SR—Schedule 1 instead and a 1040-NR — Schedule 1 if you’re not a US citizen or permanent resident. The IRS site offers tons more info about the 1040 forms.

  5. Fill out your NJ-specific forms — For your NJ gambling winnings tax return, you’ll need an NJ1040 form or an NJ1040-NR if you’re a non-resident of the state. The New Jersey online gaming tax rate is the same as for retail gambling, which should save some work.

  6. Consider itemizing your deductions — Your gambling losses are deductible against your winnings, but only if you itemize all your deductions. Taking the standard deduction is easier, but itemizing can save you some money. Note that your deducted losses cannot exceed your gambling wins in any given year.

Federal tax form W-2G — a closer look

What is the purpose of a W-2G tax form?

The W-2G tracks your winnings, displaying the amount you’ve won and showing if any winnings were withheld for tax purposes.

Where do I get a W-2G from? 

If you’ve won enough money on a specific type of New Jersey gambling to qualify, your casino, sportsbook, or other gambling operator, will send you one. They’ll also send a copy to the IRS.

How much do I need to win to receive a W-2G?

Check out our table above, which lists the thresholds, and acts as an NJ gambling tax calculator, showing you how much you need to pay in income and federal tax for each type of gambling.

What if I don’t receive a W-2G?

If you’ve won enough money to qualify for one, contact the payer of your winnings; they should’ve sent one. You still owe taxes if you haven’t won enough money to qualify. The IRS requires you to keep track of your wins and losses with a record or diary, preferably with receipts.

What happens if you don’t report gambling winnings in NJ?

In short, nothing good. The main thing is that you could be out of pocket for even more money — the IRS can quickly slam you with interest-laden penalties and fines for not paying your dues. 

If you receive a W-2G, it’s especially bad to refrain from reporting winnings. If you’ve received a W-2G about your winnings, the IRS has received one too. You are legally obligated to report any income gained from gambling.

More about NJ gambling

Check out more topics about gambling in New Jersey. From live online casinos to individual games, and everything you need to know about Atlantic City, our deep-dive into Garden State gambling hits it all.

FAQ

How much tax do you pay on NJ gambling winnings?

There isn’t a specific New Jersey gambling tax, except for lottery winnings. Additionally, gambling taxes are set at the standard federal rate of 24%. You’ll also have to pay New Jersey income tax on your winnings, which is set at 3%. For lottery winnings, the gambling tax for New Jersey is 5% for any win of over $10,000, though it goes up to 8% if you don’t give a valid Tax Identification Number. If you win over $500,000, it’s 8% either way. 

Does New Jersey tax casino winnings?

Yes. All gambling winnings are taxed at the federal level at a rate of 24%. Whether or not you live in New Jersey, you’ll also need to pay a 3% income tax on any New Jersey winnings.

Does NJ have sports betting taxes?

Yes, winnings are taxed at the standard rate of 24% + 3% income tax — this also applies to horse racing.

Is the New Jersey online gaming tax rate different from retail?

No, it’s only different for operators such as casinos. Players’ gambling winnings have the usual tax rate. You can find more details in our NJ gambling tax calculator table.

Our trusted partners
Copyright ©2024. Time2play.com. All rights reserved.