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How to Pay Taxes on Gambling Winnings in New Jersey

By  //  August 28, 2025

Gambling wins—whether from an Atlantic City slot pull, an online casino bonus round, a same-game parlay, a DFS lineup, or a raffle—are taxable income. You report them to the IRS and, if you’re a New Jersey resident (or a nonresident who won in NJ), you report them to the New Jersey Division of Taxation, too. 

For planning and “what-if” math, a gambling winnings tax calculator is a top assistant—use it to estimate how a $3,200 online-casino hit or a $25,000 parlay changes your federal owed and your NJ liability once you apply the New Jersey netting rule and your bracket. Pair it with your actual W-2G forms and your win/loss log; then you won’t be surprised at filing time.

Below is a clear, numbers-first walkthrough of how the rules work today (2024–2025 filing), with the specific forms, thresholds, and New Jersey-specific twists you need to know.

What counts as “gambling winnings”

For federal and New Jersey purposes, gambling income includes cash and the fair market value (FMV) of non-cash prizes (cars, trips, merchandise) from:

  1. Casinos (retail and online), sportsbooks (retail and online), race books, pari-mutuel pools, poker rooms, and tournaments
  2. State and multi-state lotteries, raffles, charity game nights
  3. Bingo, keno, slot machines, table games
  4. Fantasy sports and prediction market payouts that function as wagering proceeds

The IRS explicitly states you must report all gambling income—even if you don’t receive a form. 

New Jersey’s guidance covers both lottery and non-lottery gambling and treats them as taxable categories under the Gross Income Tax. 

Key federal thresholds for Form W-2G

Payers (casinos, lottery agencies, etc.) issue Form W-2G, Certain Gambling Winnings, when your win meets specific thresholds, including:

  • $1,200+ from slots or bingo
  • $1,500+ from keno (after subtracting the wager)
  • $5,000+ net from a poker tournament
  • $600+ and at least 300× the wager for certain other wins (e.g., some racing/sweepstakes)

You must still report all wins, even without a W-2G. 

Federal withholding

Depending on the game and amount, the payer may withhold 24% federal income tax from cash winnings (or apply 24% backup withholding if you don’t provide a valid TIN/SSN). Non-cash prizes over certain thresholds may be subject to 24% regular withholding based on FMV. 

Where it goes on your federal return

You report gambling income on Form 1040 / 1040-SR, Schedule 1 (Additional Income). If you itemize, you may deduct gambling losses up to, but not exceeding, your total reported winnings on Schedule A. 

Keep a contemporaneous log (tickets, receipts, player club statements). 

IRS Form 1040-SR walkthrough (U.S. Income Tax Return for Seniors)

New Jersey: the big differences

New Jersey is not a copy-paste of federal rules.

#1. You report net gambling winnings in NJ

New Jersey treats gambling as a net category. You can subtract your same-year gambling losses from your same-year gambling winnings and report only the net amount—never below zero. If losses exceed winnings, you enter 0 for the gambling line; you cannot carry a negative to offset other income categories. 

This is stated in 

  1. NJ’s Lottery & Gambling Winnings page, 
  2. Tax Bulletin TB-20(R), and 
  3. the NJ-1040 instructions. 

Example: In 2024 you win $7,800 across sportsbooks and lose $9,200 overall. For NJ, your “net gambling winnings” are $0. For federal, you still report the full $7,800 as income, and you can claim up to $7,800 of losses on Schedule A if you itemize.

#2. New Jersey Lottery is special

Individual NJ Lottery prizes of $10,000 or less are not taxable for NJ purposes; only prize amounts over $10,000 are. The NJ Lottery must withhold 5% on prizes over $10,000 up to $500,000, and 8% on prizes over $500,000 (or 8% if you don’t give a valid SSN).

#3. Other NJ gambling withholding rules

For non-lottery New Jersey gambling winnings that are subject to NJ withholding, payors must withhold 3% state income tax from payments to residents and nonresidents. 

New Jersey tax rates that apply to your net

New Jersey uses progressive Gross Income Tax rates. 

Your net gambling winnings (line item) get added to your other NJ income categories to determine your overall taxable income and marginal bracket—ranging roughly from 1.4% to 10.75% depending on your filing status and income level. See the yearly NJ-1040 rate schedules to place your total.

Residents vs. nonresidents

NJ residents report net gambling winnings from everywhere (NJ and non-NJ sources) on Form NJ-1040. Use the netting rule (losses cannot exceed winnings; cannot go below zero). 

Nonresidents report net gambling winnings from New Jersey sources only on Form NJ-1040NR. The line instructions explicitly say “Enter your net gambling winnings from New Jersey sources.” 

Credit to avoid double tax

If you’re a New Jersey resident who also paid income tax to another state on out-of-state gambling winnings, you may claim NJ’s Credit for Taxes Paid to Other Jurisdictions by filing Schedule NJ-COJ with your NJ-1040. The credit is limited and computed separately for each jurisdiction/tax—read the instructions carefully. 

Step-by-step: filing New Jersey when you gamble

  1. Track every session: Keep a daily log of wins/losses, tickets, screenshots, player statements. The log is vital if you need to substantiate losses to reach a correct net for NJ or claim losses federally (Schedule A). 
  2. Collect tax forms
    • W-2G forms from casinos/lotteries (federal reporting). 
    • 1099-MISC/NEC if you received promotional or non-wager income (less common but possible).
    • NJ withholding statements if the payer withheld 3% (non-lottery) or 5%/8% (lottery). 
  3. Do the math (same-year only)
    • Total winnings for the year.
    • Total losses for the year.
    • Compute NJ net gambling winnings = max(winnings – losses, 0). Do not net gambling against wages or other income categories in NJ. 
  4. Federal return: Report gross gambling income on Schedule 1. If you itemize, deduct losses up to the amount of winnings on Schedule A. 
  5. New Jersey return
    • Residents: Put net gambling winnings on the designated NJ-1040 line.
    • Nonresidents: Put net NJ-source gambling winnings on NJ-1040NR. 
  6. Apply credits & withholdings: Claim the NJ-COJ credit if you paid another state on the same income (resident filers only). Enter any state withholding already taken (3% casino/sportsbook; 5%/8% lottery) so it reduces your balance due. 
  7. Pay estimated tax if needed: If you’ve had large wins with little or no withholding, consider quarterly estimates to both IRS and NJ to avoid underpayment penalties. (IRS Topic 419 reminds that gambling wins can trigger estimated tax.)

Special New Jersey scenarios

Online casino & sportsbook wins (including promos)

New Jersey treats them like any other gambling income: include them in your winnings total for the year; net against actual wagering losses. Promotional credits matter only insofar as they reduce your out-of-pocket wager; your log should make the economics clear.

DFS & prediction markets

If paid out as wagering proceeds, treat as gambling income. Report federally and, for NJ residents, include in your total to compute the NJ net. (The federal principle is that all gambling/pool winnings are income; also ensure you classify platform reports correctly.) 

Poker tournaments

For federal reporting, $5,000+ net prizes trigger W-2G; withholding can apply. For NJ, the tournament payout simply rolls into your year’s gambling wins before netting. 

Table games without W-2G

Blackjack, craps, roulette often won’t generate a W-2G—but the income is still taxable. Keep meticulous records. 

Withholding amounts you’ll actually see

  1. Federal: commonly 24% of certain wins; 24% backup if you don’t provide a TIN. 
  2. NJ non-lottery: 3% state withholding on certain reportable gambling payouts. 
  3. NJ Lottery: 5% for prizes > $10,000 up to $500,000; 8% for > $500,000 or missing SSN. 

Remember: withholding is not the final tax. At filing, your actual NJ liability depends on your total NJ taxable income and the rate schedules, and your federal liability depends on your overall federal bracket.

Practical record-keeping (what NJ expects if asked)

To substantiate losses (and your NJ net), keep: losing tickets, online account statements, ATM receipts, win/loss statements from casinos, bank statements, and a daily gambling journal noting date, place, game, amounts won or lost, and supporting documents. The IRS and NJ both rely on your documentation if forms don’t capture everything. 

Common filing pitfalls in New Jersey

  1. Reporting gross instead of net on the NJ return. New Jersey wants net gambling winnings (never a negative). 
  2. Forgetting NJ Lottery’s $10,000 rule for single prizes—people often over-report or under-report. 
  3. Ignoring out-of-state tax credits (NJ-COJ) when applicable. 
  4. No estimate payments after a big win with minimal withholding. Federal and NJ underpayment penalties can apply. 
  5. Assuming a W-2G is the whole story. It often isn’t; your log may include many smaller wins/losses that still affect your federal and NJ numbers. 

Quick checklist

  • Federal: Schedule 1 (winnings), Schedule A (optional, losses up to wins), include any W-2G. 
  • New Jersey: NJ-1040 (resident) or NJ-1040NR (nonresident), net gambling winnings line, enter any NJ withholding (3% casino/sportsbook; 5%/8% lottery). 
  • Credit if taxed elsewhere (residents): Schedule NJ-COJ. 
  • Documentation: daily log + supporting proofs.

Final word

If you keep accurate records and apply the federal rules (gross income + itemized losses) alongside New Jersey’s distinctive net-only approach (never below zero), filing isn’t as daunting as it looks. Use your forms (W-2G, NJ withholding), check the current year’s rate schedules, and, when your wins are sizable or cross state lines, consider professional review so you can fully leverage the NJ-COJ credit and avoid penalties.