This bill amends existing Iowa law to clarify that all winnings from sports wagering are classified as Iowa earned income and are subject to both state and federal income tax laws. Specifically, it introduces new provisions stating that an amount deducted from these winnings for state tax purposes must be remitted to the Department of Revenue on behalf of the winner. Additionally, the bill establishes that state income tax will be withheld from sports wagering winnings whenever federal income tax withholding is applicable, aligning state tax requirements with federal regulations.

The bill also updates the existing tax withholding thresholds for various gambling activities, ensuring that winnings from sports wagering are treated consistently with other forms of gambling. The effective date for these changes is set for January 1, 2026.

Statutes affected:
Introduced: 99F.18, 422.16