What changed in 2026?
The One Big Beautiful Bill Act (Public Law 119-21) raised the minimum threshold for reporting many payments on information returns from $600 to $2,000 for payments made after 2025. IRS Publication 1099 (2026) says the threshold "increased to $2,000 and will be adjusted for inflation beginning in calendar year 2027. Previously, the threshold amount was $600."
Form W-2G is one of the returns covered. Publication 1099's chart lists W-2G winnings from "horse racing, dog racing, jai alai, lotteries, keno, bingo, slot machines, sweepstakes, wagering pools, poker tournaments, etc." with a threshold of "generally, $2,000 or more." The Instructions for Forms W-2G and 5754 now refer to an "applicable reporting threshold" in place of the old fixed dollar amounts, and state that the threshold for payments made in 2026 is $2,000.
Much of the coverage focused on slot machines, whose $1,200 jackpot trigger had stood for decades. Lottery prizes moved too, and by more: from $600 to $2,000.
What are the W-2G thresholds in 2026?
| Type of win | W-2G issued at (2026) | Before 2026 | Regular federal withholding |
|---|---|---|---|
| Lottery, sweepstakes, wagering pools | $2,000 and at least 300 times the wager | $600 and 300 times the wager | 24% when winnings minus the wager exceed $5,000 |
| Slot machines and bingo | $2,000 | $1,200 | None |
| Keno | $2,000, after subtracting the wager | $1,500 | None |
| Poker tournaments | $2,000, after subtracting the buy-in | $5,000 | None when a W-2G is issued |
In every category, 24% backup withholding can still apply if you don't give the payer a valid taxpayer identification number. The $2,000 figure will change each year from 2027 as it's indexed for inflation.
Two examples. A $1,500 scratch-off prize on a $5 ticket gets no W-2G in 2026, though it would have in 2025. A $2,500 prize on a $5 ticket clears both tests (it's over $2,000 and 500 times the wager), so the lottery files a W-2G, but no federal tax is withheld because the prize is under $5,000.
How does the 300-times rule work with the new threshold?
Lottery reporting has always had two conditions, and both must be met: the prize reaches the dollar threshold, and it is at least 300 times the amount wagered. On a $2 Powerball play, 300 times the wager is $600. On a $5 Mega Millions play it's $1,500. In both cases the $2,000 threshold is the higher bar, so for most draw-game tickets $2,000 is now the practical trigger.
The 300-times test matters again on more expensive tickets. On a $10 scratch-off, 300 times the wager is $3,000; on a $30 ticket, it's $9,000. A $2,500 prize on a $10 ticket passes the dollar threshold but pays only 250 times the wager, so no W-2G is required.
One detail is up to the payer. For lottery prizes, the W-2G instructions say the wager must be subtracted from the winnings when deciding whether to withhold, and may be subtracted, at the payer's option, when deciding whether to report. A prize sitting right at $2,000 could therefore be treated differently by different lotteries.
State rules sit on top of all this. Each lottery sets its own limits for retailer cashing, ID checks and state withholding, and many were built around the old $600 figure. They don't automatically follow the federal change, so check your lottery's claim rules. State rates are in lottery tax rates by state.
Does no W-2G mean no tax?
No. All gambling winnings are taxable income, whether or not a form is issued. A W-2G is an information return; it doesn't decide what's taxable. The IRS's Topic 419 tells you to report all gambling winnings on your return, including those that don't come with a W-2G. With the threshold higher, more prizes now fall into that category: a $500 Pick 3 win or a $1,500 scratch-off still belongs on your return.
A few related points:
- The 24% withheld on larger prizes is a prepayment, not the final bill. A big prize can be taxed at up to 37%, so you may owe more when you file. Tax on big jackpot wins works through the gap.
- If you don't give a valid Social Security number or ITIN on a reportable win, the payer must take 24% backup withholding.
- Prizes paid to non-resident aliens aren't reported on a W-2G at all. They generally have 30% withheld and are reported on Form 1042-S instead; see lottery taxes for non-residents.
What else changed for lottery taxes in 2026?
The same law cut the deduction for gambling losses to 90% of documented losses from the 2026 tax year, so itemizers can owe tax even in a break-even year. The 90% gambling loss rule explains it. The 300-times test, the $5,000 line for 24% withholding and the taxability of all winnings didn't change.
For cashing small prizes and splitting group wins with Form 5754, see taxes on small lottery winnings.
W-2G threshold questions
Did the W-2G threshold change to $2,000 for lottery winnings?
Yes. For winnings paid in 2026, a lottery prize gets a W-2G when it reaches $2,000 and is at least 300 times the wager, up from $600 before. The threshold is indexed for inflation from 2027.
At what amount does the lottery report winnings to the IRS?
In 2026, at $2,000, provided the prize is also at least 300 times the wager. Separately, 24% federal tax is withheld when the winnings minus the wager exceed $5,000.
Do you owe tax on lottery winnings without a W-2G?
Yes. All gambling winnings are taxable income whether or not a W-2G is issued, and the IRS expects you to report them.
Why did the W-2G threshold go up to $2,000?
The One Big Beautiful Bill Act raised the minimum reporting threshold for many information returns from $600 to $2,000 for payments after 2025. The IRS applies it to Form W-2G, so lottery, slot, bingo and keno reporting all moved to $2,000.
Is the slot machine W-2G threshold still $1,200?
No. For 2026 it's $2,000, the same as other W-2G categories.
This is a general explanation of the federal rules, not tax advice for your own return.
Sources: IRS Publication 1099 (2026); Instructions for Forms W-2G and 5754; IRS Topic 419.
