This bill amends existing Iowa law to classify all winnings from sports wagering as Iowa earned income, making them subject to both state and federal income tax laws. Specifically, it inserts provisions stating that an amount deducted from these winnings for state tax 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 required, aligning state tax procedures with federal regulations.

The bill also updates the existing tax withholding thresholds for various gambling activities, including slot machines and other forms of gambling, to ensure consistency in tax treatment across different types of winnings. The effective date for these changes is set for January 1, 2026.

Statutes affected:
Introduced: 99F.18, 422.16