Gambling winnings tax in Iowa

Iowa allows the deduction only to filers who itemize on the federal return. Take the federal standard deduction and the offset disappears, so gross winnings are taxed even in a year you finished down.

The two examples below are the same numbers the calculator uses, worked at Iowa rates.

Two examples, worked at 2026 Iowa rates

A single filer with $60,000 of other income who takes the standard deduction on everything except gambling losses.

The calculator also applies what this table leaves out: the federal overall limit on itemized deductions at the top federal bracket, taken before the table and a personal exemption credit off the tax, which does not change with income.

Iowa withholds 3.8 percent. The payout that triggers it depends on the wager, and the lowest trigger is $600. The rules in the state's sources:

• the state lottery and other lotteries, sweepstakes and wagering pools: above $600 (lottery, games of skill, games of chance and raffles).
• slot machines, keno and bingo: above $600 (bingo only, under Iowa Code chapter 99B. Slot machines and keno at a casino are not in this line).
• pari-mutuel wagering: above $1,000.
• slot machines, keno and bingo: above $1,200 (slot machines at casinos licensed under Iowa Code chapter 99F. The statute does not name casino keno).
• sports wagering: above $5,000, and only where the payout is at least 300 times the stake, measured after the stake comes off (from 1 January 2026, only where federal withholding under 26 U.S.C. 3402(q)(3) applies).

These sources give no rule for other kinds of bet, so do not assume tax was withheld on one.

Withholding is a credit against the bill, not the bill itself. It does not settle what you owe.

Iowa school districts and some counties levy a surtax of up to 20 percent of the Iowa tax liability, not of income. At 20 percent the effective top state and local rate is about 4.56 percent.

From tax year 2026 the federal deduction for gambling losses is cut to 90 percent of what you lost, and never more than what you won. Public Law 119-21 did it, at section 70114(a), by rewriting 26 U.S.C. 165(d).

Iowa has not said whether the federal 90 percent limit applies. Its own law measures the state deduction by the federal figure, so the limit can arrive without Iowa doing anything. Iowa follows the federal code as it changes.

Our estimate assumes the limit applies, which gives the higher tax. The calculator also shows the tax if the limit does not apply. We would rather tell you the number could be lower than let you plan around one that turns out to be too low.

A nonresident files once Iowa source income including gambling winnings is $1,000 or more and gross income exceeds $9,000 single or $13,500 married. The Illinois reciprocity agreement does not cover gambling.

The calculator works the bill for somebody who lives in Iowa. It does not apportion income between states, so a nonresident return is not what the figure above describes.

More about Iowa

Sources

Every figure above traces to a primary source: a statute, an administrative code, a state agency page, or official form instructions.

1. 1. Iowa Code 422.12(2)(a): a personal exemption credit of $40, $80 for a head of household or a joint return, $40 for each dependent, and $20 more for each person 65 or older, not to exceed the tax (checked 2026-10-12)
2. 2. Iowa Code 422.5(3): no tax at 65 or older on net income of $24,000 or less, or $32,000 joint or head of household, and none where a married couple has over $32,000 together (checked 2026-10-12)
3. 3. Iowa Department of Revenue, Summary of Tax Year 2025 Form Changes: the federal enhanced deduction for seniors is already in federal taxable income, and is added back only for the low-income exemption, the alternate tax and the tax reduction (checked 2026-10-10)
4. 4. Iowa Code 422.7: net income starts from federal taxable income under IRC 63 (checked 2026-09-25)
5. 5. Iowa Code 422.7, net income means the taxable income computed under section 63 of the Internal Revenue Code (checked 2026-09-21)
6. 6. IDR announcement, 2026 individual income tax and interest rates (checked 2026-09-11)
7. 7. IDR tax guidance, Iowa tax on gambling (checked 2026-09-11)
8. 8. IDR, Iowa-Illinois reciprocal agreement: Iowa gambling winnings are not covered (checked 2026-10-11)
9. 9. Iowa Code 422.16(1)(d), withholding on gambling and sports wagering winnings (checked 2026-10-05)
10. 10. Iowa Code 422.9, deductions from net income repealed effective 2023 (checked 2026-09-11)
11. 11. Iowa Code 422.3, rolling conformity to the Internal Revenue Code (checked 2026-09-11)
12. 12. IDR withholding tax information, gambling and sports wagering (checked 2026-10-05)
13. 13. IDR school district and EMS surtax rate list (checked 2026-09-11)
14. 14. Iowa Code 422.7: "net income" means the taxable income as properly computed for federal income tax purposes under section 63, which from 2026 carries the federal overall limit on itemized deductions (checked 2026-10-01)

The federal rule, for the parts of this page that rest on it

1. 15. Public Law 119-21 section 70114(a), which rewrote 26 U.S.C. 165(d) on wagering losses from tax year 2026 and sets out its text (checked 2026-10-18)
2. 16. 26 U.S.C. 3402(q)(3)(A), withholding on wagering proceeds, and 26 U.S.C. 3402(q)(5), which exempts slot machines, keno and bingo, 2024 edition of the US Code (checked 2026-10-18)