Gambling winnings tax in North Carolina

North Carolina allows gambling losses only as an itemized deduction on the state return, whether or not you itemize federally. Take its standard deduction and it taxes your gross winnings. Only 90 percent of your losses count from 2026, so a losing year can still leave part of your winnings taxed.

Checked against North Carolina’s own sources on 2026-09-16.

In short

North Carolina’s gambling loss deduction applies to tax years that begin on or after January 1, 2025. If you already filed for 2025, amend your return to claim it.
Sportsbooks have no duty to withhold North Carolina tax from your winnings. The Lottery Commission must withhold on winnings of $600 or more.8, 10
Three official North Carolina pages are out of date on the loss deduction.

How North Carolina treats gambling losses

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North Carolina does not tie the deduction to your federal itemizing choice. You can itemize on the North Carolina return even if you take the federal standard deduction, but the losses count only if you do, in place of North Carolina's standard deduction.

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

Two examples, worked at 2026 North Carolina rates

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

A losing year

You win $50,000 and lose $52,000, so you finish down $2,000.

Federal: $3,596
North Carolina: $636
Total: $4,232

You finished the year down and still owe tax.

Federally you itemize, so your losses offset your winnings, but the 2026 rule caps that deduction at 90 percent and leaves $3,200 taxable. North Carolina lets you deduct gambling losses as an itemized deduction on the state return, whether or not you itemize federally. Your North Carolina income, after the larger of the standard deduction and your itemized deductions, goes from $47,250 without the win to $63,200 with it. The extra $15,950 is taxed at 3.99 percent, which comes to $636.

A winning year

You win $50,000 and lose $10,000, so you finish up $40,000.

Federal: $10,350
North Carolina: $1,995
Total: $12,345

Federally you take the $16,100 standard deduction, which is worth more than itemizing, so your gambling losses do not reduce your federal tax at all. North Carolina lets you deduct gambling losses as an itemized deduction on the state return, whether or not you itemize federally. Your North Carolina income, after the larger of the standard deduction and your itemized deductions, goes from $47,250 without the win to $97,250 with it. The extra $50,000 is taxed at 3.99 percent, which comes to $1,995.

North Carolina income tax rates, 2026

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Taxable income	Rate
$0 and above	3.99 percent

Withholding on winnings

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North Carolina withholds 3.99 percent. The rule in the state's sources:

the state lottery: $600 or more.

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.

The federal 90 percent loss limit in North Carolina

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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).

North Carolina applies the federal 90 percent limit, so the deduction on your state return is cut the same way.

North Carolina follows the federal code as it stood on 2025-07-05. The paragraph above says what this means for the federal 90 percent limit.

If you do not live in North Carolina

A nonresident with income derived from gambling activities in North Carolina must file a D-400 with Schedule PN once gross income from all sources exceeds the filing threshold.

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

More about North Carolina

The gambling loss deduction

The loss deduction applies to tax years that begin on or after January 1, 2025. If you already filed for 2025, amend your return and claim it on Form D-400 Schedule A line 9.

Three official North Carolina pages are out of date on the loss deduction: the sports wagering FAQ dated April 2024, the standard-versus-itemized topic page, and the text of G.S. 105-153.5 on the legislature site. All three are older than Session Law 2026-41.

Withholding and reporting

Sportsbooks have no duty to withhold North Carolina tax. The Lottery Commission must withhold on winnings of $600 or more.8, 10

Sportsbook operators must report players with winnings of at least $2,000 on request.9

The rate

The North Carolina rate goes down further. It is 3.49 percent for 2027 through 2029, then 3.24 percent, then 2.99 percent.3

Sources

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

1. G.S. 105-153.5(a1), North Carolina child deduction amount by adjusted gross income (checked 2026-09-25)
2. G.S. 105-153.5(a)(1), North Carolina standard deduction amount by filing status (checked 2026-09-25)
3. S.L. 2026-41 (SB 257), Part XLIV, wagering loss itemized deduction and rate schedule (checked 2026-09-11)
4. NCDOR important notice, impact of recently enacted laws on individual income tax (checked 2026-09-11)
5. S.L. 2026-31, IRC update fixing the Code at July 5, 2025 (checked 2026-09-11)
6. Form D-401 instructions (2025), state itemizing without federal itemizing, and a standard deduction with no amount for age (checked 2026-09-11)
7. NCDOR withholding tables and instructions for employers, 2026 rate (checked 2026-09-11)
8. G.S. 105-163.2B, withholding on lottery winnings of $600 or more (checked 2026-09-11)
9. S.L. 2026-31 section 5.4, G.S. 105-251.2(c1): sportsbooks report players with winnings of at least $2,000 on request (checked 2026-10-06)
10. NCDOR sports wagering FAQ (April 2024), A11: an operator is not required to withhold North Carolina income tax from winnings (checked 2026-10-06)

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

11. 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)