Casino gambling was first legalized in Arizona back in 1988, with the passing of the Indian Gaming Regulatory Act. However, Arizona sports betting online or in-person didn’t become legal until April 2021, when Governor Doug Ducey signed HB2772 into law.
It’s important to note the two branches of Arizona’s gaming industry because there are different criteria for declaring gambling winnings with each branch. For some, the different tax rates or thresholds for declaring gambling winnings in Arizona can be confusing.
Fortunately, we’ve simplified this process by breaking down everything Arizonans need to know to pay their taxes on retail or online gambling winnings.
Does Arizona Tax Gambling Winnings?
In short, yes. There is a tax on Arizona gambling winnings in the state, which includes online casinos and sports betting, mobile gaming apps, and land-based casinos. How much you are taxed for your retail or online gambling winnings is based on your income bracket.
Arizona Gambling Tax Rates
According to the Arizona Department of Revenue, there are four tax brackets that state residents should be aware of. Furthermore, the tax on Arizona gambling winnings will range from 2.59% to 4.50% depending on which income bracket you fall into1:
| Income Bracket (Single) | Tax Rate | Income Bracket (Married) | Tax Rate |
|---|---|---|---|
| $0 – $26,500 | 2.59% | $0 – $53,000 | 2.59% |
| $26,501 – $53,000 | 3.34% | $53,001 – $106,000 | 3.34% |
| $53,001 – $159,00 | 4.17% | $106,001 – $318,000 | 4.17% |
| $159,001+ | 4.50% | $318,001+ | 4.50% |
What if you did not receive Form W-2G or Form 1099 from the gambling operator? You are still responsible for paying taxes on your winnings.
Your winnings must be included on your tax return regardless if a W-2G tax form is issued by the casino. This includes winning bets that have not been withdrawn from your online betting account.
How To File Arizona Gambling Taxes
Three Arizona tax filing forms should be considered for full-time residents of the state. The form that you use to declare your gambling winnings will depend on which group you fall into below:
Form 140:
In Arizona, Form 140 is the Resident Personal Income Tax Form. Form 140 is only used by full-year members of Arizona. If ANY of these conditions are true, then use Form 140 to file your state income taxes2:
- Taxable income is $50,000+, regardless of filing status
- You are making adjustments to income
- Claiming itemized deductions
- You claim nonrefundable tax credits other than the Family Tax Credit, the Credit for Excise Taxes, and/or the Property Tax Credit or are required to recapture prior tax credit amounts
- You are claiming estimated tax payments
If ALL of the above-mentioned points are true, then use Form 140A to complete your state income tax filing3.
Form 140EZ:
Lastly, Form 140EZ includes a list of requirements that must ALL be true:
- You are single, or if married, filing a joint return
- Taxable income is less than $50,000, regardless of filing status
- You (and your spouse, if married filing a joint return) were under the age of 65 and not blind at the end of the tax year
- You are not claiming any dependents or the exemption for qualifying parent or grandparent
- Not claiming itemized deductions
- Not making a voluntary gift donation through means of a refund check-off
- The only tax credits you are claiming are the Family Income Tax Credit and/or Increased Excise Tax Credit
Nonresidents and part-year residents of Arizona that have won money gambling are not exempt from paying taxes. We have Arizona out-of-state gambling winnings information for these scenarios below.
Deducting Gambling Losses In Arizona
Your gambling losses must be filed as itemized deductions. Note that your gambling loss deductions cannot surpass your winnings.
For example, let’s assume that your reported total gambling winnings were $2,500 in 2022. You will be unable to deduct more than $2,500 on Schedule A of Form 1040.
The IRS may request proof of your gambling deductions. In this case, you will be required to provide the IRS with information to support your claims.
The state has the right to reject your deductions if there isn’t sufficient evidence.
Tips For Deducting Gambling Losses:
- Do not discard gambling slips and receipts. Keep these handy for tax season.
- Ensure that these receipts have dates of when the wager was made and settled.
- Ensure that there is a record of the online casinos you were playing at and possibly contact details.
- Maintain a spreadsheet of your wins and losses throughout the year.
- If the gambling operator does not issue you a Form W-2G or Form 1099, contact them to see if this is correct. You can also request a document with your wins and losses for the year.
Arizona Out-of-State Gambling Winnings
Many people live in Arizona for only part of the year. Oftentimes, they travel to Arizona during the winter months (snowbirds) to escape the cold and snow from northern states. As such, it is crucial that these gamblers and bettors understand the taxation of Arizona gambling winnings.
Along with part-year residents, non-residents that are in Arizona on vacation or visiting are required to pay tax on Arizona gambling winnings of $15,000 or more4.
There is a different tax form for part-year residents and nonresidents of Arizona.
If you are a resident of Arizona for only part of the year, then refer to Form 140PY to complete your state tax return.
Conversely, non-residents must fill out Form 140NR to file their tax return in Arizona. Note that the $15,000 threshold takes your winnings and income generated in the state into consideration.
Federal Gambling Taxes
On top of the 2.59% to 4.50% Arizona gambling tax, federal taxes will be owed to the government as well.
Your total tax bill will hinge on your tax bracket, but 24% is the flat rate that will be withheld if a Form W-2G is issued. According to the IRS, four scenarios will trigger a Form W-2G and 24% withheld from gambling winnings5:
| Winnings Threshold | Type of Gambling |
|---|---|
| $1,200+ | Slot machines, bingo |
| $1,500+ | Keno |
| $5,000+ | Poker tournament |
| $600+ AND at least 300 times the amount wagered OR the winnings are subject to federal income tax withholding | Except for winnings from bingo, slot machines, keno, and poker tournaments |
Depending on your tax bracket, there are two likely scenarios: a refund or more than 24% will be required to be paid on your tax bill. Regardless of income, everyone will be subject to money being withheld if they meet one of the thresholds above.
Additionally, online gamblers should familiarize themselves with Form 1099-MISC, Miscellaneous Income. Online casinos can opt to issue a Form 1099-MISC to gamblers that have winnings of more than $600.
What is it exactly and when will gamblers in Arizona find one in their mailbox?
Gambling operators have the power to issue a Form 1099-MISC when at least $600 was awarded in prizes and awards6.
The Best Arizona Online Casino To Gamble At
Gamblers in Arizona have several options for online Arizona casinos to play at. However, our top choice is Wild Casino.
At Wild Casino, gamblers can enjoy incredible casino bonuses and take advantage of an extensive menu of casino games.
There are exciting live table games like roulette, blackjack, and online baccarat. Additionally, you can find the best real money slots at Wild Casino. Whether you like the old classics or new video slot machines, Wild Casino has a slot for every gambler’s preference.
You can also feel confident depositing at this leading-online casino through a variety of convenient options.
Along with major credit cards and money orders, gamblers can take advantage of cryptocurrencies at Wild Casino. The same deposit options are also available for collecting your winnings as well. Just remember to pay your taxes on these winnings.
Sources
Updated Guidance for Arizona Individual Income Taxpayers | Arizona Department of Revenue. Retrieved From “https://azdor.gov/news-events-notices/news/updated-guidance-arizona-individual-income-taxpayers”
Form 1040 – Resident Personal Income Tax Form — Calculating | Arizona Department of Revenue. Retrieved From “https://azdor.gov/forms/individual/form-140-resident-personal-income-tax-form-calculating”
3 Resident Personal Income Tax (Short) Form — Fillable (use the 140 Optional Table for the current year) | Arizona Department of Revenue. Retrieved From “https://azdor.gov/forms/individual/resident-personal-income-tax-short-form-fillable”
4 Form 140NR Instructions | Arizona Department of Revenue. Retrieved From “https://azdor.gov/file/6917/download?token=OoDaz5SI”
5 Instructions for Forms W-2G and 5754 (01/2021) | Internal Revenue Service. Retrieved From “https://www.irs.gov/instructions/iw2g”
About Form 1099-MISC, Miscellaneous Income | Internal Revenue Service. Retrieved From “https://www.irs.gov/forms-pubs/about-form-1099-misc”
