Senate File 605 amends existing Iowa law regarding the taxation of winnings from gambling activities, specifically focusing on slot machines and sports wagering. The bill establishes that all winnings from both slot machines and sports wagering are considered Iowa earned income and are subject to state and federal income tax laws. It mandates that any state tax deducted from these winnings must be remitted to the Department of Revenue on behalf of the winner. Additionally, the bill specifies that state income tax will be withheld on winnings from sports wagering whenever federal income tax is also required to be withheld, aligning state tax procedures with federal regulations.

The bill also updates the thresholds for withholding state income tax on winnings from various gambling activities. It maintains the existing thresholds for gambling activities authorized under chapters 99B, 99G, and 99D, while introducing a new provision for sports wagering. The effective date for these changes is set for January 1, 2026.

Statutes affected:
Introduced: 99F.18, 422.16
Enrolled: 99F.18, 422.16