Do I owe New Jersey state tax on sports betting and gambling winnings?
By the W2gMatch team · Sources checked 09-06-2026 · General information, not tax advice.
Yes. New Jersey taxes all gambling winnings, from Atlantic City casinos, online casinos and sportsbooks, under its Gross Income Tax at rates from 1.4% to 10.75%, and withholds 3% from payouts to residents and nonresidents alike. New Jersey Lottery prizes of $10,000 or less are exempt. Losses may be netted against winnings in the same year on the New Jersey return.
How New Jersey taxes the winnings
The Division of Taxation lists as taxable “legalized gambling (online and in-person sports betting, casino, racetrack, etc.) and illegal gambling,” and New Jersey Lottery prizes above $10,000. [1] Prizes of $10,000 or less from the New Jersey Lottery are exempt; the threshold is per prize, not per year, and out-of-state lottery prizes are taxable at any amount. [1] [2]
Net gambling winnings are their own category of New Jersey gross income, taxed at the ordinary rates, 1.4% on the first $20,000 rising to 10.75% above $1 million. [3]
Losses on the New Jersey return
New Jersey is one of the few states that lets a casual gambler net. “You may use your gambling/lottery losses to offset gambling/lottery winnings from the same year as long as they do not exceed your total winnings,” and if losses exceed winnings the figure reported is zero, not a negative. [1] The return instructions add that a net loss in one category cannot offset another, so gambling losses never reduce wages. [2]
No federal itemizing is needed and the federal 90% limit plays no part; New Jersey's netting is its own rule. The Division may ask you to substantiate the losses used, and lists casino win/loss statements, a daily log, canceled checks, and losing tickets as acceptable proof. [2]
What is withheld at the window
“New Jersey Income Tax is withheld at an amount equal to 3% of the payout for both New Jersey residents and nonresidents.” [1] Lottery payouts have their own schedule: 5% between $10,001 and $500,000, 8% above $500,000, and 8% on any prize over $10,000 when no taxpayer identification number is given. [1]
Residents, part-year residents and visitors
Residents report net winnings from inside and outside New Jersey. Nonresidents report net winnings from New Jersey sources on Form NJ-1040NR, and “gambling losses from sources outside New Jersey cannot be used to offset gambling winnings from New Jersey sources.” [2] A New Yorker who plays in Atlantic City or bets on a New Jersey app has New Jersey-source winnings and a 3% withholding to claim.
What is legal in New Jersey, and who sends the forms
Atlantic City casinos, licensed online casinos and online sportsbooks all issue W-2Gs at the federal thresholds and apply the 3% New Jersey withholding. Atlantic City took in $2.9 billion in 2025. [4]
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 New Jersey compares.
Related questions
Can I deduct gambling losses in New Jersey if I take the federal standard deduction?
Yes. New Jersey nets losses against same-year winnings on its own return regardless of federal itemizing.
Is a $9,000 New Jersey Lottery prize taxable in New Jersey?
No. Prizes of $10,000 or less from the New Jersey Lottery are exempt. A $9,000 prize from another state's lottery is taxable.
The paid file, one click away
Get your 2026 file ready for January — from $49
W-2Gs and statements are filed to the year as they arrive, so the 2026 return starts reconciled in January, under the 2026 loss rules. Filing 2025 late, or amending it? The same file works for 2025.
- IRS transcript read form by form
- Each W-2G matched to its statement
- One package your preparer signs off
Essential covers up to 3 casinos or sportsbooks; a bigger season upgrades for the difference. One-time payment for the tax year, no subscription. Document organization, not tax advice; a licensed preparer reviews and files the return. All plans.
Free on every account
The easiest way to track your gambling: say it, snap it, hand it off
Say it
Speak or type the night. The AI box fills the entry.
Pick the place
One tap finds the casino near you and your players card.
Snap the W-2G
It reads the form and files it to the right tax year.
Your sessions, places and W-2Gs are filed as you go. At tax time, hand it off: the assistant reconciles them with your casino statements and IRS transcript in one file.
See the federal side of the same numbers
The calculator shows the federal taxable figure and the phantom income the 90% limit creates. New Jersey's tax applies on top.
Sources
- New Jersey Division of Taxation, Lottery and Gambling Winnings, last updated April 1, 2026
- New Jersey Division of Taxation, 2025 Form NJ-1040NR instructions, line 21 net gambling winnings, tax year 2025
- ustax.tools, New Jersey tax brackets 2026 (1.4% to 10.75%), 2026 (secondary source)
- American Gaming Association, State of the States 2026, 2026 (secondary source)
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.