All gambling winnings — including every over under bet payout — are taxable federal income. Two thresholds govern when paperwork follows: $600 with a 300× multiplier for W-2G issuance, and $5,000 with the same multiplier for mandatory withholding.
What triggers a W-2G on an over under bet?
A sportsbook must issue a W-2G when net winnings exceed $600 and the payout is at least 300 times the amount wagered — both conditions must be met simultaneously. A $2 wager returning $650 net clears both bars. A $50 wager returning $700 net does not (700 ÷ 50 = 14×, well below 300×).
Starting tax year 2026, a new federal threshold takes effect: W-2G reporting kicks in at $2,000 net winnings (still subject to the 300× rule). This change was enacted in the 2025 federal tax bill.
When does the sportsbook withhold 24%?
Mandatory federal withholding of 24% applies when net winnings exceed $5,000 and are also at least 300× the wager. The same 24% rate applies as backup withholding if a winner fails to provide a valid Taxpayer Identification Number.
Winning below those thresholds does not mean the income is exempt. Every dollar won is still reportable on your federal return regardless of whether a W-2G arrives.
How operators calculate net winnings — and why bonuses matter
Operators such as DraftKings calculate net earnings as: Cash Winnings − Cash Entry Fees + Cash Bonuses. Welcome-offer bonus funds count toward that total. Bettors who treat a sign-up promotion as "free money" can face an unexpected tax bill. See the licensed US sportsbooks for over under bets page for details on which operators are active in which states.
Can you deduct losses on a totals wager?
Yes, but only as an itemized deduction — and only up to the amount of winnings. Under the 2025 tax bill, that deduction is further capped at 90% of winnings. Standard-deduction filers get no gambling-loss benefit at all.
What records should totals bettors keep?
- All W-2G forms received from sportsbooks
- Wagering tickets and bet confirmation emails
- Bank withdrawal slips and canceled checks
- Account statements showing deposits, withdrawals, and bonus credits
The IRS Instructions for Forms W-2G and 5754 (Rev. January 2026) spell out payer obligations in full. Keep records for at least three years in case of audit.
2026 W-2G thresholds at a glance
| Trigger | Net Winnings Threshold | Multiplier Required | Action |
|---|---|---|---|
| W-2G issuance (2026 onward) | $2,000 | 300× | Sportsbook sends form to bettor and IRS |
| W-2G issuance (pre-2026) | $600 | 300× | Sportsbook sends form to bettor and IRS |
| Mandatory 24% withholding | $5,000 | 300× | Sportsbook withholds before paying out |
| Backup withholding (no TIN) | Any amount | N/A | 24% withheld until valid TIN provided |
State taxes on over under winnings
Federal rules apply nationwide, but most states with legal sports betting also tax gambling winnings at the state level. Rates and filing requirements vary. For a full breakdown of which states allow online totals wagering legally, see where over under betting is legal in 2026.
For broader context on how US gambling law intersects with tax obligations, the legal over under betting guide covers state licensing frameworks and what regulated play means for bettors.
Before placing a wager, confirm the operator is licensed in your state. For a breakdown by operator, visit the best sportsbooks for over under bets page. Review what -110 odds actually return and factor the tax hit into any expected-value calculation — the math changes once Uncle Sam takes a cut. Must be 21+ in most states. Gambling problem? Call 1-800-GAMBLER.