---
kind: "section"
citation: "26 U.S.C. § 4401"
title: "26"
title_heading: "Internal Revenue Code"
number: "4401"
heading: "Imposition of tax"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/4401"
units:
  - "Subtitle D — Miscellaneous Excise Taxes"
  - "Chapter 35 — Taxes on Wagering"
  - "Subchapter A — Tax on Wagers"
---

# §4401. Imposition of tax

- (a) **Wagers—**
  - (1) **State authorized wagers—** There shall be imposed on any [wager](/usc/26/4421.md?p=1) authorized under the law of the [State](/usc/26/4482.md?p=c-1) in which accepted an excise tax equal to 0.25 percent of the amount of such [wager](/usc/26/4421.md?p=1).
  - (2) **Unauthorized wagers—** There shall be imposed on any [wager](/usc/26/4421.md?p=1) not described in [paragraph (1)](#a-1) an excise tax equal to 2 percent of the amount of such [wager](/usc/26/4421.md?p=1).
- (b) **Amount of wager—** In determining the amount of any [wager](/usc/26/4421.md?p=1) for the purposes of this subchapter, all charges incident to the placing of such [wager](/usc/26/4421.md?p=1) shall be included; except that if the taxpayer establishes, in accordance with regulations prescribed by the Secretary, that an amount equal to the tax imposed by this subchapter has been collected as a separate charge from the [person](/usc/26/4377.md?p=b-1-A) placing such [wager](/usc/26/4421.md?p=1), the amount so collected shall be excluded.
- (c) **Persons liable for tax—** Each [person](/usc/26/4377.md?p=b-1-A) who is engaged in the business of accepting [wagers](/usc/26/4421.md?p=1) shall be liable for and shall pay the tax under this subchapter on all [wagers](/usc/26/4421.md?p=1) placed with him. Each [person](/usc/26/4377.md?p=b-1-A) who conducts any wagering pool or [lottery](/usc/26/4421.md?p=2) shall be liable for and shall pay the tax under this subchapter on all [wagers](/usc/26/4421.md?p=1) placed in such pool or [lottery](/usc/26/4421.md?p=2). Any [person](/usc/26/4377.md?p=b-1-A) required to register under [section 4412](/usc/26/4412.md) who receives [wagers](/usc/26/4421.md?p=1) for or on behalf of another [person](/usc/26/4377.md?p=b-1-A) without having registered under [section 4412](/usc/26/4412.md) the name and place of residence of such other [person](/usc/26/4377.md?p=b-1-A) shall be liable for and shall pay the tax under this subchapter on all such [wagers](/usc/26/4421.md?p=1) received by him.

## Source credit

(Aug. 16, 1954, ch. 736, 68A Stat. 525; Pub. L. 85–859, title I, § 151(a), Sept. 2, 1958, 72 Stat. 1304; Pub. L. 93–499, § 3(a), Oct. 29, 1974, 88 Stat. 1550; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–362, title I, § 109(a), Oct. 25, 1982, 96 Stat. 1731.)

## Notes

### Editorial Notes

### Amendments

1982—Subsec. (a). Pub. L. 97–362 substituted provision that there shall be imposed on any wager authorized under the law of the State in which accepted an excise tax equal to 0.25 percent of the amount of such wager and that there shall be imposed on any other wager an excise tax equal to 2 percent of the amount of such wager for provision that there be imposed on wagers, as defined in section 4421, an excise tax equal to 2 percent of the amount thereof.

1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

1974—Subsec. (a). Pub. L. 93–499 substituted “2 percent” for “10 percent”.

1958—Subsec. (c). Pub. L. 85–859 made all persons required to register under section 4412 of this title who receive wagers for or on behalf of another person without having registered under section 4412 of this title the name and place of residence of such other person liable for the tax on all such wagers received by them.

### Statutory Notes and Related Subsidiaries

### Effective Date of 1982 Amendment

Pub. L. 97–362, title I, § 109(c)(1), Oct. 25, 1982, 96 Stat. 1731, provided that: “The amendment made by subsection (a) [amending this section] shall take effect on January 1, 1983.”

### Effective Date of 1974 Amendment

Pub. L. 93–499, § 3(d)(1), Oct. 29, 1974, 88 Stat. 1551, provided that: “The amendments made by this section [enacting section 4424 and amending this section and section 4411 of this title] take effect on December 1, 1974, and shall apply only with respect to wagers placed on or after such date.”

### Effective Date of 1958 Amendment

Pub. L. 85–859, title I, § 151(b), Sept. 2, 1958, 72 Stat. 1304, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to wagers received after the date of the enactment of this Act [Sept. 2, 1958].”