Starting January 1, 2026, the U.S. federal jackpot tax reporting threshold for slot machine winnings rose from $1,200 to $2,000. For Canadian visitors to U.S. casinos, this means fewer wins will trigger automatic federal tax withholding, and any single win under $2,000 during the transition period is paid by hand with no federal taxes withheld.
If you’ve ever hit a jackpot at a U.S. casino and walked away with less than you expected, you already know the sting of federal tax withholding. It’s one of the most common surprises for Canadian visitors who win big south of the border, and for decades, that surprise kicked in the moment your winnings hit $1,200.
That has changed.
Starting January 1, 2026, the IRS increased the federal jackpot tax reporting threshold from $1,200 to $2,000. It’s the first update to this figure since 1977. More wins will stay in your pocket without triggering automatic withholding, and the whole process gets a little simpler along the way.
But what does this change actually mean for Canadian winners? How does it interact with the Canada-U.S. tax treaty? And what happens to the taxes already withheld on past wins? This post breaks it all down, clearly, and without the tax jargon.
Why Is the U.S. Raising the Casino Tax Threshold?
The $1,200 threshold had been in place since 1977. At the time, it was set to capture only meaningful jackpots. But nearly 50 years of inflation have eroded its real value significantly. A win that felt substantial in 1977 is far more modest today, which meant the IRS had been triggering tax reporting requirements on an increasingly large number of routine wins.
The American Gaming Association and various advocacy groups had long pushed for an update, arguing that the old threshold created unnecessary administrative burden, for players, casinos, and the IRS alike. The raise to $2,000 is designed to realign the threshold with its original intent: flagging genuinely significant wins, not everyday jackpots.
For Canadian visitors, this is good news across the board.
What Changes on January 1, 2026?
The core change is straightforward: slot machine winnings below $2,000 will no longer trigger automatic federal tax withholding or an IRS Form W-2G.
For Canadian gamblers, the practical impact is significant. A much larger range of slot wins, everything between $1,200 and $1,999, will now be exempt from automatic withholding.
How Does U.S. Casino Tax Withholding Work for Canadians?
When a Canadian citizen wins above the applicable threshold at a U.S. casino, the casino is required to withhold 30% of the winnings as non-resident withholding tax before paying out. This is the IRS’s way of collecting tax from non-U.S. residents who earn income, including gambling income, on American soil.
Here’s where it gets important: Canada and the United States have a tax treaty that entitles Canadians to a refund of withheld gambling taxes. In many cases, that refund can equal the full amount withheld. This is a major advantage that many Canadian visitors don’t know about.
The refund is possible because the Canada-U.S. Tax Convention allows Canadians to offset their U.S. gambling winnings against any U.S. gambling losses from the same trip. If your losses exceed or equal your winnings, you may be entitled to a full refund of withheld taxes.
Which Casino Games Are Subject to Tax Withholding?
Not all casino games trigger U.S. tax withholding. Here’s how the most common games are treated:
Taxable games (subject to withholding):
- Slot machines:
- Poker tournaments
- Keno
- Lottery
- Horse racing
- Game shows and other wagering
Non-taxable games (no withholding required):
- Blackjack (unless it’s a tournament)
- Baccarat
- Craps
- Roulette
What Does This Mean for Canadian Casino Visitors Specifically?
Canadian visitors are among the most frequent non-U.S. tourists to American casinos, particularly in Las Vegas and along the border. For years, the $1,200 threshold caught many Canadians off guard, especially slot players who hit moderately-sized jackpots and suddenly found 30% withheld at the cage.
The new $2,000 threshold means:
- Fewer wins will be taxed automatically. Wins between $1,200 and $1,999 will now be paid in full, with no federal taxes withheld.
- Less paperwork. No IRS Form W-2G means a simpler experience at the casino and less documentation to manage when you return home.
- The refund process still applies. For any wins at or above $2,000 where taxes are withheld, Canadians remain fully eligible to apply for a non-resident withholding tax refund under the Canada-U.S. tax treaty.
It’s also worth noting that this change doesn’t affect any past wins. If taxes were withheld from a previous trip to a U.S. casino, those amounts are still fully eligible for a refund, and the statute of limitations for claiming those refunds is three years.
How to Get a Refund on U.S. Casino Tax Withholding
If you’ve had taxes withheld on U.S. casino winnings, the refund process involves filing a U.S. non-resident tax return (Form 1040-NR) with the IRS. It sounds straightforward, but navigating international tax rules, treaty provisions, and IRS documentation requirements is genuinely complex, especially if you’re doing it from Canada.
That’s where a specialist makes all the difference.
RMS (Refund Management Services) has been helping Canadians and other non-U.S. residents recover withheld gambling taxes since 1998. The RMS team includes U.S.-Canada Tax Accountants headed by a Canadian Chartered Accountant, all of whom specialize in international gambling tax law. To date, RMS has helped thousands of Canadians recover money that was rightfully theirs.
To successfully claim a refund, you’ll typically need:
- Your IRS Form W-2G (issued by the casino at the time of your win)
- Proof of your gambling losses from the same trip (receipts, casino loyalty card records, etc.)
- A valid Individual Taxpayer Identification Number (ITIN), RMS can help you obtain one if you don’t have it
RMS has offices in Toronto (serving all Canadian and international clients), Vancouver, Las Vegas, Mexico, and Southeast Asia, making it easy to start the process from wherever you are, even before you leave the U.S.
Is Now a Good Time to Claim Old Casino Tax Refunds?
Yes, and here’s why timing matters. The IRS allows non-residents to claim refunds on withheld gambling taxes for up to three years from the original tax year. With the threshold change in 2026, now is an ideal moment to review past casino trips and see whether any withheld taxes are recoverable. Many Canadians are surprised to find they’ve left hundreds, or even thousands, of dollars on the table simply because they didn’t know a refund was available.
Make the Most of Every Win
The raise from $1,200 to $2,000 is a genuine win for Canadian casino visitors. More jackpots will now be paid in full, the administrative process gets simpler, and the overall experience of gaming in the U.S. becomes a little less complicated.
But for wins above the new threshold, the rules haven’t changed: 30% will still be withheld, and you’ll still be entitled to claim it back under the Canada-U.S. tax treaty.
Whether you’re planning your next trip to Vegas or looking to recover taxes from a past win, RMS is here to help. With over 25 years of experience and a team built specifically for this purpose, RMS makes the refund process as stress-free as possible.
Apply now for free at RMS – Call 1-855-622-6712 or click here to get started.
Frequently Asked Questions
What is the new U.S. casino tax reporting threshold starting in 2026?
Starting January 1, 2026, the federal tax reporting threshold for slot machine winnings increased from $1,200 to $2,000. Wins below $2,000 will not trigger automatic federal tax withholding or require an IRS Form W-2G.
Do Canadian casino winners qualify for a U.S. gambling tax refund?
Yes. Under the Canada-U.S. Tax Convention, Canadian residents are entitled to claim a refund on U.S. non-resident withholding tax applied to gambling winnings. In some cases, the refund can equal the full amount withheld, up to 30% of the taxable win.
How long do I have to claim a refund on U.S. casino winnings?
The IRS allows non-residents to claim gambling tax refunds for up to three years from the original tax year.
Does the $1,200 to $2,000 threshold change apply to all casino games?
No. The threshold change applies specifically to slot machine winnings. Other games, such as poker tournaments, keno, and lottery, have their own separate thresholds. Contact RMS for more information.
Which casino games are exempt from U.S. tax withholding?
Blackjack (outside of tournaments), baccarat, craps, and roulette are not subject to U.S. federal tax withholding. Games like slots, poker tournaments, keno, and lottery are subject to withholding once winnings hit the applicable threshold.
How does RMS help Canadians recover withheld casino taxes?
RMS files U.S. non-resident tax returns (Form 1040-NR) on behalf of Canadian clients, handles all IRS correspondence, and assists with obtaining an Individual Taxpayer Identification Number (ITIN) if needed. RMS has been specializing in gaming tax refunds for Canadians since 1998.
What do I need to apply for a U.S. casino tax refund?
You’ll need your IRS Form W-2G (provided by the casino), documentation of gambling losses from the same trip, and a valid ITIN. RMS can guide you through each step and help gather the required documentation.