What is the OBBBA 90% gambling loss cap for 2026?

By the W2gMatch team · Sources checked 09-28-2026 · General information, not tax advice.

The One Big Beautiful Bill Act (OBBBA, Public Law 119-21, section 70114) caps deductible gambling losses at 90 percent, and at winnings, for tax years beginning after December 31, 2025, under section 165(d). Win $100,000 and lose $100,000 in 2026: deduct $90,000, owe tax on $10,000. Repeal cleared House Ways and Means 38-5 on September 16, 2026; not yet law.

Prefer to watch? The half-minute version

The King of the Casinos vs. the 90% Gambling Loss Rule. General information, not tax advice.Watch on YouTube

What did the One Big Beautiful Bill Act change in section 165(d)?

For tax years beginning after December 31, 2025, section 165(d) of the Internal Revenue Code allows a deduction for 90 percent of gambling losses, limited to gambling winnings. The amended text says the amount allowed as a deduction “(A) shall be equal to 90 percent of the amount of such losses during such taxable year, and (B) shall be allowed only to the extent of the gains from such transactions during such taxable year.” [1] The change is section 70114 of Public Law 119-21, the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, 139 Stat. 72. [2] [18]

Two things did not change. Gambling winnings are still reported in full as other income on Schedule 1 (Form 1040), whether or not any form arrives. [3] Losses are still deductible only on Schedule A, as an other itemized deduction, and only by taxpayers who itemize. [3] [4] The law changed the loss side of the return and nothing else.

Repeal status as of September 28, 2026: the 90 percent rule is still the law for 2026 returns. On September 16, 2026, the House Ways and Means Committee voted 38-5 to advance H.R. 10357, which carries language restoring the full deduction retroactive to tax years beginning after December 31, 2025. It has not passed the House or the Senate. [9] [10] Details are in the repeal section below.

2025 vs 2026 at a glance

RuleTax year 2025 (return filed in 2026)Tax year 2026 (return filed in 2027)
Share of losses deductible100%90%
Cap at winningsYesYes
Must itemize on Schedule AYesYes
Break-even year ($100,000 won, $100,000 lost)$0 taxable$10,000 taxable
Carryforward of unused lossesNoneNone
Professional gambler's business expensesTreated as wagering losses, 100% allowed up to winningsTreated as wagering losses, inside the 90% and the cap
Form W-2G minimum (slots, bingo, keno)$1,200 slots and bingo, $1,500 keno$2,000
AuthoritySection 165(d) before amendmentSection 165(d) as amended by Pub. L. 119-21, section 70114

Under 2025 law a player who won $100,000 and lost $100,000 deducted $100,000 and owed nothing on the gambling. Under 2026 law the same player deducts $90,000 and reports $10,000 of taxable income. [1] [6]

How is the 90% gambling loss deduction calculated?

Deductible gambling losses for 2026 are the lesser of 90 percent of total losses or total winnings. Take every loss for the year, multiply by 0.9, and if that figure is larger than the year's winnings, stop at the winnings. [1] The table runs the formula three ways on $100,000 of winnings.

YearWinningsLosses90% of lossesDeduction allowedTaxable, 2026 ruleTaxable, 2025 rule
Break-even$100,000$100,000$90,000$90,000$10,000$0
Net winner$100,000$60,000$54,000$54,000$46,000$40,000
Net loser$100,000$150,000$135,000$100,000 (capped)$0$0

A gambler who wins $100,000 and loses $100,000 in 2026 deducts $90,000 and reports $10,000 of taxable income. A gambler who wins $100,000 and loses $60,000 deducts $54,000 and reports $46,000, against $40,000 under 2025 law. A gambler who wins $100,000 and loses $150,000 computes 90 percent as $135,000, is capped at the $100,000 of winnings, and reports $0, the same as before. The 90 percent bites only when losses are below about 111 percent of winnings; above that the cap at winnings was already the binding limit.

The same arithmetic at a smaller scale: win $10,000 and lose $10,000 in 2026, deduct $9,000, and $1,000 is taxable. The calculator runs the formula on your own figures for 2025 and 2026.

What does phantom income cost in dollars?

Phantom income (taxable income created by the 90% limit in a year the player did not come out ahead: the 10% of losses the deduction no longer covers) is the name practitioners and the gaming industry use for the result. The word is not in the statute; the arithmetic is. The lost 10 percent does not carry forward to another year, does not offset wages or other income, and does not reduce the winnings reported on Schedule 1. It is simply taxed. [1]

Gross winnings for the year$50,000
Gross losses for the year$50,000
Losses allowed: 90% of $50,000$45,000
Phantom income$5,000
Federal tax on it at a 32% marginal rate$1,600

A break-even year under amended section 165(d), tax year 2026. A player who won $50,000 and lost $50,000 deducts $45,000, reports $5,000 of phantom income, and at a 32 percent marginal rate owes $1,600 of federal tax on money never kept. Under 2025 law the tax was $0.

On the $100,000 break-even year, the $10,000 of phantom income costs $2,200 of federal tax in the 22 percent bracket, $2,400 at 24 percent, $3,200 at 32 percent and $3,700 at 37 percent. For 2026 the 37 percent rate begins above $640,600 of taxable income for a single filer and $768,700 for a married couple filing jointly. [7] State income tax can add to each figure; see the state section below.

Do I have to itemize to deduct gambling losses in 2026?

Yes. IRS Topic 419 says you may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040), and that the losses you deduct cannot be more than the gambling income you reported. [3] [4] For 2026 the standard deduction is $16,100 for single filers and married filing separately, $32,200 for married filing jointly and surviving spouses, and $24,150 for heads of household. [7] A player whose itemized deductions, gambling losses included, do not reach that figure takes the standard deduction, reports every dollar of winnings, and deducts no losses at all. For that player the 90 percent rule changes nothing, because the loss deduction was already worth zero.

On a joint return the two spouses' figures are combined. The IRS's proposed regulations under section 165(d) say that 90 percent of the spouses' combined wagering losses is allowed only to the extent of their combined wagering gains. [8] The deduction page walks the three limits in order.

Does the 90% cap apply to sports betting, poker and lottery?

Yes. Section 165(d) governs losses from wagering transactions of every kind, so slots, table games, sports betting, poker, lotteries, racing and daily fantasy contests treated as wagering are all limited to 90 percent. [1] The rule bites hardest where winnings and losses are both large and close together: high-volume sports bettors, poker players who reinvest most of what they win, and slot players with a big W-2G year. A net winner whose losses are well below winnings was limited by the cap at winnings first and may see no change.

For a poker tournament player, buy-ins in events that did not cash are wagering losses, and 90 percent of them count against tournament cashes. A recreational player with $80,000 of cashes and $80,000 of losing buy-ins in 2026 deducts $72,000 and reports $8,000 of taxable income; under 2025 law nothing was owed. The sports betting page and the fantasy sports page cover how each product reports.

Does the 90% limit apply to professional gamblers?

Yes, and more broadly. Amended section 165(d)(2) says the term “losses from wagering transactions” includes “any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.” [1] For a professional filing on Schedule C, travel, lodging, entry fees, data and other business expenses are wagering losses, so the 90 percent applies to losses and expenses together, and the total is still capped at winnings.

Winnings$300,000
Wagering losses$250,000
Business expenses (travel, entry fees)$30,000
Combined losses under section 165(d)(2)$280,000
Deduction under 2026 law: 90% of $280,000$252,000
Taxable under 2026 law$48,000
Taxable under 2025 law ($300,000 less $280,000)$20,000

An illustrative professional year, our arithmetic applied to the statute as written. The 90 percent rule adds $28,000 of taxable income to a year whose economic profit was $20,000.

Tax Foundation ran the same mechanics on a real 2025 World Series of Poker record: $1,478,240 of cashes against $1,297,143 of buy-ins, a net of $181,097, on which federal tax at 37 percent rises from $67,006 under the old rule to about $115,000 under the new one. [17] Because section 165(d)(1)(B) allows the deduction only to the extent of the year's wagering gains, a professional cannot report a net Schedule C loss from gambling or carry unused losses forward. [1] Schedule C profit, including the phantom part, is also subject to self-employment tax; the professional gambler calculator shows both.

Does the 90% rule apply to my 2025 tax return?

No. The amendment applies to taxable years beginning after December 31, 2025, so the first affected return is the 2026 return filed in 2027. [1] [2] A 2025 return, filed in 2026, still deducts 100 percent of losses, still capped at winnings and still only for itemizers, and still uses the old Form W-2G thresholds of $1,200 for slots and bingo, $1,500 for keno and $600 for other wagers that pay at least 300 times the wager. [6] If you are working on a 2025 return today, nothing on this page about 90 percent applies to it.

The second change: the Form W-2G threshold is $2,000 for 2026

The same Public Law (section 70433) raised the general information-reporting threshold in section 6041 from $600 to $2,000, and the IRS applied that figure to slot, bingo and keno winnings, whose old thresholds sat in the regulations rather than the statute. For payments made in calendar year 2026 the minimum Form W-2G threshold is $2,000, up from $1,200 for slots and bingo and $1,500 for keno, per the IRS Instructions for Forms W-2G and 5754 revised January 2026. [6] [2] [8] The 300-times-the-wager test for sports, racing and lottery payouts is unchanged. [6] Fewer forms does not mean less income: every dollar won is reportable whether or not a W-2G is issued, and the W-2G has boxes for reportable winnings, date won, type of wager, tax withheld and state figures, but no box for losses. [6] The thresholds page has every form and figure for both years.

Will the 90% cap be repealed before I file?

As of September 28, 2026, the 90 percent gambling loss cap has not been repealed. A repeal provision has cleared one House committee and nothing more. Here is every step so far, with dates.

  • July 4, 2025. Public Law 119-21 is signed; section 70114 sets the 90 percent limit for tax years beginning after December 31, 2025. [2]
  • July 7, 2025. Rep. Dina Titus introduces H.R. 4304, the FAIR BET Act, to restore the full deduction; it is referred to the Ways and Means Committee. [12] [18]
  • July 9 and 10, 2025. Sen. Catherine Cortez Masto introduces S. 2230, the FULL HOUSE Act, and asks the Senate to pass it by unanimous consent; a senator objects and it stalls. [14] [18]
  • July 23, 2025. Rep. Andy Barr introduces H.R. 4630, the WAGER Act, a third repeal bill. [18]
  • Late 2025 (reported January 10 to 12, 2026). The House Rules Committee declines to attach the FAIR BET Act to the FY2026 defense authorization bill, so it gets no floor vote. [16] [15] Analysts put the revenue the cap raises at about $1.1 billion over eight years. [15] [17]
  • January 2026. Reps. Steven Horsford and Max Miller introduce a House version of the FULL HOUSE Act. [11]
  • February 12, 2026. Rep. Titus files discharge petition No. 119-16 on H.R. 4304 to force it out of committee. [12]
  • April 17, 2026. The IRS publishes proposed regulations (REG-113229-25) implementing the 90 percent rule; comments closed June 16, 2026. [8]
  • September 16, 2026. The House Ways and Means Committee votes 38-5 to advance H.R. 10357, the Digital Asset Tax Certainty Act introduced by Rep. Jason Smith, carrying the FULL HOUSE Act language that restores the full deduction retroactive to tax years beginning after December 31, 2025. The committee describes it as restoring “the ability of taxpayers to deduct financial losses incurred due to gambling, preventing taxpayers from being taxed on phantom income.” The Joint Committee on Taxation estimates repeal would reduce federal revenue by about $2 billion over ten years. [9] [10] [11]

What has to happen next: a House floor vote, which is not expected before the November 2026 midterm elections; then the Senate; then the President's signature. [10] Rep. Titus has asked for House approval “before Jan. 1, 2027.” [13] Until a bill is signed, plan the 2026 return on the 90 percent rule. If a retroactive repeal is enacted after a 2026 return is filed on the 90 percent rule, an amended return recovers the other 10 percent, but only for losses that were documented in the first place. Keep 2026 records as if every dollar of loss counts.

What has the IRS said about the 90% rule?

On April 17, 2026 the IRS published proposed regulations, REG-113229-25, at 91 FR 20599. Proposed section 1.165-10(a) restates the statute: a deduction is allowed under section 165(d) for 90 percent of wagering losses during the taxable year, but only to the extent of wagering gains during that year, for taxable years beginning after December 31, 2025. [8] The same package aligns the slot, bingo and keno reporting threshold with the new statutory figure. [8] IRS Topic 419, as revised September 24, 2026, still describes the itemizing requirement, the cap at winnings and the diary requirement without mentioning the 90 percent figure, so a reader who checks only the IRS topic page will not see the 2026 change. [3]

Does my state follow the 90% rule?

Not necessarily. State returns start from different federal figures, and several states allow no gambling loss deduction at all, which makes the federal 90 percent question moot for the state return while state tax still falls on gross winnings. A state that starts from federal taxable income inherits the federal deduction as computed. The state comparison carries each state's rule with its own revenue department source.

What should I do before December 31, 2026?

  1. Keep a session log now. The IRS asks for an accurate diary or similar record with the date and type of each wager, the establishment, the people with you, and the amounts won and lost, backed by receipts, tickets and statements. [3] [5] Only 90 percent of a documented loss counts; an undocumented loss counts for nothing. The session log template is built for this.
  2. Use the session method where it applies. Netting wins and losses within a single session, the approach in Chief Counsel Advice AM 2008-011, lowers gross winnings, so the 90 percent applies to a smaller base. [19] The session method page explains the rule.
  3. Request every win/loss statement and collect every W-2G. The IRS already holds the W-2Gs; a return that reports less winnings than the IRS transcript draws a CP2000 notice. [20] The win/loss statement page explains what a statement proves and what it does not.
  4. Check whether itemizing will beat the standard deduction. If it will not, the losses do not help and the winnings are taxed in full either way. [3] [7]
  5. Run the number. The gambling loss calculator shows the deduction and the phantom income under both years' rules, and W2gMatch builds the reconciled figure from the actual statements and W-2Gs.

Related questions

Is the 90% gambling loss cap in effect?

Yes. Amended section 165(d) applies to taxable years beginning after December 31, 2025, so it governs 2026 returns filed in 2027. A repeal provision cleared the House Ways and Means Committee 38-5 on September 16, 2026 inside H.R. 10357, but it has not passed the House or the Senate and is not law.

How is the 90% gambling loss deduction calculated?

Take 90 percent of total wagering losses for the year, then cap that figure at total wagering winnings. Win $100,000 and lose $100,000: 90% of $100,000 is $90,000, so $10,000 is taxable. Win $100,000 and lose $150,000: 90% is $135,000, capped at $100,000, so $0 is taxable.

What is phantom income under the 90% rule?

Taxable gambling income created by the 10% of losses you can no longer deduct. Win $50,000 and lose $50,000 in 2026 and you deduct $45,000, leaving $5,000 taxed even though you kept nothing; at a 32% marginal rate that is $1,600 of federal tax.

Do I have to itemize to deduct gambling losses in 2026?

Yes. IRS Topic 419 says gambling losses are deductible only if you itemize on Schedule A (Form 1040). For 2026 the standard deduction is $16,100 single, $32,200 married filing jointly and $24,150 head of household (IRS IR-2025-103), so a player who does not itemize pays tax on gross winnings with no loss offset.

Does the cap apply to sports betting and poker, or only casinos?

All of it. The limit sits in section 165(d), which governs wagering losses of every kind: slots, tables, sports betting, poker, lotteries, racing and fantasy contests treated as wagering.

Does the 90% limit apply to professional gamblers?

Yes, and more broadly. Section 165(d)(2) treats a professional's otherwise deductible wagering expenses, such as travel and entry fees, as losses from wagering transactions, so 90 percent of losses plus expenses is allowed on Schedule C, capped at winnings, and no net loss or carryforward is possible.

Does the 90% rule apply to my 2025 tax return?

No. For tax year 2025 (returns filed in 2026) losses are deductible at 100%, still capped at winnings and still only if you itemize. The 90% limit starts with tax year 2026, filed in 2027.

Will the 90% cap be repealed before I file?

Unknown. On September 16, 2026 the House Ways and Means Committee approved H.R. 10357 (38-5) with language restoring the full deduction retroactive to tax years beginning after December 31, 2025; a House floor vote is not expected before the November 2026 midterms, and the Senate has not acted. Plan on the 90% rule; if repeal becomes law retroactively, recompute and amend.

How do I avoid phantom income?

You cannot avoid the arithmetic, only reduce what it applies to. Document every loss so all of it is available to count, use the session method where it applies so gross winnings are not overstated, reconcile statements against the W-2Gs the IRS holds, and confirm that itemizing beats the standard deduction. A licensed preparer should review the return.

The paid file, one click away

Get your 2026 file ready for January — from $49

W-2Gs and statements are filed to the year as they arrive, so the 2026 return starts reconciled in January, under the 2026 loss rules. Filing 2025 late, or amending it? The same file works for 2025.

  • IRS transcript read form by form
  • Each W-2G matched to its statement
  • One package your preparer signs off
Get the 2026 fileStill working on 2025? Get the 2025 file

Essential covers up to 3 casinos or sportsbooks; a bigger season upgrades for the difference. One-time payment for the tax year, no subscription. Document organization, not tax advice; a licensed preparer reviews and files the return. All plans.

Free on every account

The easiest way to track your gambling: say it, snap it, hand it off

  • Say it

    Speak or type the night. The AI box fills the entry.

  • Pick the place

    One tap finds the casino near you and your players card.

  • Snap the W-2G

    It reads the form and files it to the right tax year.

Your sessions, places and W-2Gs are filed as you go. At tax time, hand it off: the assistant reconciles them with your casino statements and IRS transcript in one file.

Start the free trackerSee how it works

See your 2026 number before the return is due

Enter winnings and losses for an instant phantom-income figure under the 2025 and 2026 rules, then start the session log that makes every loss dollar count.

Try the calculatorGet the session log template

Sources

  1. 26 U.S.C. § 165(d), Wagering losses, as amended by Pub. L. 119-21 § 70114 (Legal Information Institute), amendment effective for taxable years beginning after December 31, 2025
  2. Public Law 119-21, One Big Beautiful Bill Act, sections 70114 and 70433 (govinfo), enacted July 4, 2025, 139 Stat. 72
  3. IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
  4. IRS Instructions for Schedule A (Form 1040), line 16, Other itemized deductions, tax year 2025 edition
  5. IRS Publication 529, Miscellaneous Deductions, Gambling losses up to the amount of gambling winnings, Rev. December 2020
  6. IRS Instructions for Forms W-2G and 5754, Rev. January 2026
  7. IRS news release IR-2025-103, tax inflation adjustments for tax year 2026, October 9, 2025
  8. Federal Register, REG-113229-25, proposed regulations on wagering losses and reporting thresholds (proposed § 1.165-10), 91 FR 20599, April 17, 2026; comments closed June 16, 2026
  9. House Committee on Ways and Means, release on the markup of H.R. 10357 (38-5), September 16, 2026
  10. Covers, House committee advances repeal of 90 percent gambling loss deduction limit, September 16, 2026 (secondary source)
  11. Hoodline, Nevada's Dina Titus pushes bill to undo gamblers' $2 billion tax hit, September 17, 2026 (secondary source)
  12. Congress.gov bill status for H.R. 4304, FAIR BET Act (govinfo bulk data), latest action February 12, 2026
  13. Rep. Dina Titus, release on the Ways and Means vote and the FAIR BET Act, September 16, 2026
  14. Sen. Catherine Cortez Masto, release on the unanimous consent request for S. 2230, the FULL HOUSE Act, July 10, 2025
  15. Yogonet, US House panel blocks FAIR BET Act, leaving 2026 gambling tax change in place, January 12, 2026 (secondary source)
  16. CDC Gaming, House Rules Committee blocks FAIR BET Act, leaving 2026 gambling tax reform uncertain, January 10, 2026 (secondary source)
  17. Tax Foundation, Gambling losses tax change in the One Big Beautiful Bill (JCT estimate, WSOP example), August 22, 2025 (secondary source)
  18. Womble Bond Dickinson, Client alert: changes to gambling loss deductions under the One Big Beautiful Bill, September 23, 2025 (secondary source)
  19. IRS Office of Chief Counsel, AM 2008-011, Reporting of wagering gains and losses, December 12, 2008
  20. IRS, Understanding your CP2000 series notice, page last reviewed July 14, 2026
  21. IRS, Get an extension to file your tax return (Form 4868), page last reviewed or updated September 20, 2026

Related

This page is general information about how U.S. federal and state tax rules apply to gambling, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.