Picture a year at the casino where you win $50,000 and lose $50,000. You walk away even. Under the old rules, if you itemized, that meant no tax on your gambling.
This year, it doesn’t work that way.
Starting with 2026, federal law lets you deduct only 90% of your gambling losses. In that break-even example, you’d deduct $45,000, not $50,000. The other $5,000 gets taxed as income, even though you never actually kept a dime of it.
In the 22% bracket, that’s roughly $1,100 in federal tax on money you never had.
I’ve been a CPA since 1981, and I can count on one hand the rules that tax you for breaking even. This is one of them. Here’s how it works, who it hits and what to do before the year ends.
Where this came from
The change was tucked into the One Big Beautiful Bill Act, signed July 4, 2025. It caps the deduction for gambling losses at 90% of those losses, and you still can’t deduct more than you won.
It applies to tax years beginning after Dec. 31, 2025, according to an IRS and Treasury notice in the Federal Register. Translation: Your 2026 return, the one you’ll file in spring of 2027, is the first one it hits.
Professional gamblers get hit twice. The cap also covers their business expenses, like travel and entry fees, not just their losses, according to an analysis by the accounting firm KPMG.
And KPMG points out something worse: Under the new math, you can owe tax on more than your net winnings, or even when you finished the year behind.
States don’t all play along. California, for one, hasn’t adopted the change, according to its Franchise Tax Board.
Who actually gets hurt
Here’s the part most coverage skips. Many casual gamblers were never deducting losses in the first place.
You can deduct gambling losses only if you itemize, according to the IRS. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, the IRS says. Unless your mortgage interest, state taxes, charity and other deductions top that, you take the standard deduction.
If that’s you, your winnings were already fully taxable and your losses were already worth nothing. The new rule doesn’t change much.
The people who get hurt are itemizers who win big and lose big: frequent slot players who hit jackpots, serious sports bettors, poker players and pros. That’s not a small crowd. Americans bet $166.94 billion on sports alone in 2025, according to the American Gaming Association.
One piece of good news came in the same law. The threshold for a W-2G form on slot and bingo jackpots rose to $2,000 for 2026, up from $1,200, according to the IRS. So you could get fewer tax forms.
Don’t confuse fewer forms with less tax, though. All gambling winnings are taxable, whether a casino reports them or not.
A fix is moving, but don’t bet on it
Congress may undo this. In mid-September, the House Ways and Means Committee advanced the FAIR BET Act, H.R. 4304, from Rep. Dina Titus, D-Nev., after attaching it to a digital asset tax bill, according to CPA Practice Advisor.
“This would stop the reduction to 90% from taking effect,” Titus said.
The bill has 25 House co-sponsors, and casinos and sportsbooks are pushing hard for it. A Senate version, the FULL HOUSE Act, has backing from Democratic Sens. Catherine Cortez Masto and Jackie Rosen of Nevada and Republican Sen. Ted Cruz of Texas.
But the bill still needs a vote of the full House, which isn’t expected until after the November elections. Then the Senate has to pass it and the president has to sign it. That’s a lot of ifs with the clock running out on 2026.
Real talk — I’ve made plenty of money mistakes in my life, and I’ve spent decades helping people sidestep the ones they don’t have to make. Sign up for the free Money Talks Newsletter and let my scars save you a few of your own. Free, and worth more than that.
5 moves to make before Dec. 31
If you gamble enough for this to matter, here’s what I’d do now.
1. Start a gambling log today
The IRS expects an accurate diary or similar record of your wins and losses, backed up by tickets, receipts and statements. Write down the date, the place, the game and the amount won or lost.
If you haven’t been keeping one, start now and reconstruct what you can for earlier in the year.
2. Ask for your win/loss statement
If you use a casino player’s card, ask the casino for a year-end win/loss statement. It’s not perfect, but it’s useful backup for your own records.
Keep every W-2G, too. The IRS gets a copy, so it will notice if the income doesn’t show up on your return.
3. Run the numbers on itemizing
Add up your likely itemized deductions, including 90% of your gambling losses, and compare the total with your standard deduction. If itemizing doesn’t beat it, your losses won’t help you either way.
If it’s close, talk to a tax pro before you make big year-end moves.
4. Don’t let a jackpot become an April surprise
If you’re ahead for the year, or you hit a big one, set money aside for the tax. You can also raise your withholding at work or make an estimated payment so you don’t get hit with a bill plus a penalty.
If you already know you’ll owe more than you can pay, get ahead of it. Here’s where you can find help with tax debt before the IRS comes looking.
5. Plan as if the 90% rule stays
Maybe Congress fixes this in time. Maybe it doesn’t. Either way, don’t make decisions today based on a bill that hasn’t passed.
Plan for the rule as it stands. If the fix comes through, consider it a bonus.
The bottom line
Gambling is entertainment, and the house already has an edge. Now the tax code has one, too.
If you want the backstory, read why the new tax law has gamblers upset and what the new tax law changes for slot machine players. And check how much your standard deduction just increased.
Add a Comment