Do I owe Indiana state tax on sports betting and gambling winnings?
By the W2gMatch team · Sources checked 09-06-2026 · General information, not tax advice.
Yes, and Indiana allows no deduction for losses. Indiana taxes gambling winnings in federal adjusted gross income at its 2026 flat rate of 2.95%, falling to 2.90% in 2027, plus a county income tax. The Department of Revenue says Indiana does not have a deduction for gambling losses. Casinos withhold 2.95% from slot and keno wins of $2,000 or more and from other reportable winnings.
How Indiana taxes the winnings
Indiana adjusted gross income begins with federal AGI, which includes gambling winnings, and is taxed at a flat rate: “The Indiana Individual adjusted gross income tax rate for 2026 is 2.95%,” adjusting to 2.90% in 2027. [1] Every county adds its own income tax on top.
Losses on the Indiana return
Asked whether a gambling loss claimed on the federal return can be claimed on the state return, the Department answers: “No. Indiana does not have a deduction for gambling losses.” [2] Like Illinois and Ohio, Indiana taxes the gross winnings whatever the year's result.
What is withheld at the window
Departmental Notice #16 requires Indiana casinos to withhold from slot machine wins (not reduced by the wager) and keno wins (reduced by the wager) at the reporting threshold, $2,000 or more for winnings on or after January 1, 2026, at the 2.95% rate, and from sports wagering and other winnings that meet the federal rules. [3] The withholding rate follows the income tax rate year by year: 3.00% for 2025, 2.95% for 2026, 2.90% for 2027 and later. [3]
Residents, part-year residents and visitors
Residents are taxed on winnings from everywhere. Winnings from an Indiana casino, racino or Indiana-licensed sportsbook are Indiana-source income for a nonresident, who files Form IT-40PNR and claims the withholding shown on the W-2G.
The federal return underneath
Federal: for tax years beginning in 2026, only 90% of gambling losses are deductible (the 90% gambling loss cap).
Every state page sits on the same federal rules: all winnings are reported on Schedule 1 whether or not a form arrives, and losses are an itemized deduction capped at winnings and, from 2026, at 90% of losses under amended section 165(d). The federal loss page and the by-state table show how Indiana compares.
Related questions
Can I deduct gambling losses on my Indiana return?
No. The Indiana Department of Revenue states that Indiana does not have a deduction for gambling losses.
Does an Indiana casino withhold state tax from a slot jackpot?
Yes, from a slot win of $2,000 or more for winnings on or after January 1, 2026, at the 2.95% rate.
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See the federal side of the same numbers
The calculator shows the federal taxable figure and the phantom income the 90% limit creates. Indiana's tax applies on top.
Sources
- Indiana Department of Revenue, Rates, fees and penalties (2.95% for 2026), read September 6, 2026
- Indiana Department of Revenue, Individual income tax FAQs: Can I claim a gambling loss on my state return?, read September 6, 2026
- Indiana Department of Revenue, Departmental Notice #16, withholding on winnings from riverboat gaming, December 2025
Related
This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.