A bill for an act relating to state income tax withholdings on winnings from sports wagering, and including effective date provisions.(See HF 794.)

Iowa House Study Bill 91 (HSB91) mandates that all winnings from sports betting are considered Iowa-earned income and subject to both state and federal income taxes. The bill requires that state income tax be withheld from sports wagering winnings whenever federal income tax withholding is also required. This legislation is set to take effect on January 1, 2026.

The bill received unanimous support in both the House and Senate, indicating bipartisan agreement on the need to clarify tax obligations for sports wagering winnings. The legislative process was swift, with the bill being introduced in January 2025 and signed into law by March 2025, reflecting a consensus on its importance.

While the bill passed without opposition, some stakeholders in the sports betting industry have expressed concerns that the additional tax withholding requirements could deter casual bettors. They argue that the new regulations might reduce the appeal of sports wagering in Iowa, potentially impacting the state's gaming revenue.