While sports betting is now legal in New York, you’ll still have to pay taxes on any wins you make. You’ll have to pay tax to the federal government via the IRS and to New York State itself through the Department of Taxation and Finance.
The amount of tax you have to pay varies according to a variety of factors such as your overall income and how much you’ve made from your sports bets. So we’ve prepared the following guide that quickly explains how much tax you have to pay, and how you have to do it.
How much tax you’ll need to pay on sports betting wins in New York
The federal tax rate for all kinds of gambling winnings is 24%. However the New York State tax rate for gambling varies according to your income.
So if your income is less than $8,500, you’ll have to pay the lowest tax rate of 4%. But if your income is over $1,077,550, then you’ll have to pay the highest tax rate of 8.82%. We should also note that residents of New York City and parts of Yonkers may also have to pay a local income tax.
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How to pay your sports betting taxes in New York
It’s ultimately your responsibility to report any wins you have made from your sports bets. You will have to do so by stating any income from gambling on your federal and state tax returns. As such, you should keep a record of all of your wins and losses when using sportsbooks in New York. The good news is that it’s pretty easy to get a record of your wagering activity at all of the
best online sportsbooks in New York.
Bear in mind that if you manage to get an exceptionally large win of over $600 for sports betting, it will automatically notify the IRS who will issue you a W-2G Form. Here you have to enter in how much you won and what kinds of tax was withheld. We should note that federal taxes may sometimes automatically be removed from your overall payout.
The best sports betting sites in New York today
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What kinds of taxes do online sportsbooks in New York have to pay?
Thankfully it’s not just you who has to pay tax for getting involved in New York sports betting. This is because each of the regulated online sportsbooks in the Empire State has to pay 51% of their revenues back to the state in taxes. This dwarves the tax rate of just 13.5% over the border in New Jersey. A tough price to pay for the fact that online betting is now open in New York.
We should also note that each New York online sportsbook had to pay $25 million in application fees to get regulated by the New York State Gaming Commission compared to the previous record high of $20 million in Pennsylvania. So while we all know the answer to the question of, ‘Is DraftKings legal in New York?’ we can see that the process of becoming legal wasn’t exactly cheap.
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Looking for more betting news and tips in the Empire State? Take a look at our piece on the best New York sportsbook promo codes!
