Can I deduct gambling losses in 2026?
By the W2gMatch team · Sources checked 09-28-2026 · General information, not tax advice.
Yes, if you itemize. For tax year 2026 you deduct gambling losses on Schedule A, only up to your winnings, and only 90% of the losses count, under IRC section 165(d) as amended by section 70114 of Public Law 119-21 (signed July 4, 2025) for tax years beginning after December 31, 2025. Returns for 2025 still deduct 100%.
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The rule, as written
Section 165(d) of the Internal Revenue Code now says that for losses from wagering transactions 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 90% figure was added by section 70114(a) of Public Law 119-21, signed July 4, 2025, and section 70114(b) makes it apply to taxable years beginning after December 31, 2025. [1] Before that, for tax year 2025 and earlier, the deduction was 100% of losses, capped at winnings.
Treasury restated the rule in proposed regulations published April 17, 2026 (REG-113229-25). Proposed section 1.165-10 allows a deduction “for 90 percent of the amount of such losses during the taxable year, but only to the extent of the gains from wagering transactions during that year” and applies to taxable years beginning after December 31, 2025; comments closed June 16, 2026. [7] The regulations are proposed, not final, but the 90% figure is in the statute itself, so it does not depend on them.
The mechanics did not change. Winnings go on Schedule 1 (Form 1040), line 8b, in full. Losses are a separate entry on Schedule A, line 16, other itemized deductions, “only to the extent of gambling winnings reported on Schedule 1 (Form 1040), line 8b.” [2] IRS Topic 419, last reviewed September 24, 2026, still says only that “you may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040)” and that losses “can't be more than the amount of gambling income you reported”; it does not yet mention the 90% limit, so for 2026 the statute is the source to read. [3]
Three limits, applied in order
- You must itemize. Gambling losses live on Schedule A. If 90% of your losses plus your other itemized deductions do not beat the standard deduction, which for 2026 is $16,100 single, $32,200 married filing jointly and $24,150 head of household, there is no benefit from the losses at all, and the winnings are still fully reported. [6] [3]
- Only 90% of losses count for tax years beginning in 2026 or later. For a 2025 return, 100% counts. [1]
- The deduction cannot exceed the winnings reported on the return, in either year. [1] [2]
The disallowed 10% is gone for good. Section 165(d) measures losses and gains within a single taxable year, so the slice that does not count in 2026 does not carry forward, does not carry back and cannot offset wages or any other income. [1]
2025 vs 2026: the same numbers, two answers
| Rule | 2025 return (filed in 2026) | 2026 return (filed in 2027) |
|---|---|---|
| Share of losses that count | 100% | 90% |
| Ceiling on the deduction | Gambling winnings for the year | Gambling winnings for the year |
| Where it is claimed | Schedule A, line 16, itemizers only | Schedule A, line 16, itemizers only |
| Standard deduction, single | $15,750 | $16,100 |
| Standard deduction, married filing jointly | $31,500 | $32,200 |
| Standard deduction, head of household | $23,625 | $24,150 |
| W-2G threshold, slots and bingo | $1,200 | $2,000 |
| W-2G threshold, keno | $1,500 | $2,000 |
Loss rule from section 165(d) as amended. [1] Standard deductions from IRS release IR-2025-103 of October 9, 2025 (Revenue Procedure 2025-32), which lists both the 2025 amounts as changed by Public Law 119-21 and the 2026 amounts. [6] W-2G thresholds from the Instructions for Forms W-2G and 5754, revised January 2026: “The minimum threshold amount for payments made in calendar year 2026 is $2,000.” [5] [7]
Here is what the change does to three players who each report $50,000 of winnings. The arithmetic is the statute applied to round numbers, nothing more.
| Scenario | Won | Lost | 2025 rule: deductible | 2025 rule: taxable | 2026 rule: deductible | 2026 rule: taxable |
|---|---|---|---|---|---|---|
| Break-even | $50,000 | $50,000 | $50,000 | $0 | 90% of $50,000 = $45,000 | $5,000 |
| Net winner | $50,000 | $30,000 | $30,000 | $20,000 | 90% of $30,000 = $27,000 | $23,000 |
| Net loser | $50,000 | $80,000 | $80,000 capped at $50,000 | $0 | 90% of $80,000 = $72,000, capped at $50,000 | $0 |
The limit bites hardest when losses are close to winnings, which describes most high-volume bettors and poker players. The net loser is unchanged because the cap at winnings, not the 90%, was already the binding limit. The net winner pays tax on $3,000 more than before. The break-even player pays tax on $5,000 that was never in his pocket.
What the 90% limit does to a break-even year
Tax year 2026. On a 2025 return the same player deducts $100,000 and the taxable figure is $0.
If you win $100,000 and lose $100,000 in 2026, you deduct $90,000 and pay tax on $10,000 you never kept. That $10,000 exists only because of the limit; it is usually called phantom income (income that appears on the return although the taxpayer ended the year with no gain). The phantom income guide works through more cases, and the 90% cap page tracks the rule itself.
What the phantom income costs in tax
Phantom income is taxed at your marginal federal rate, the rate on your last dollar. For 2026 the 22% bracket begins above $50,400 of taxable income for a single filer ($100,800 joint), the 24% bracket above $105,700 ($211,400 joint) and the 32% bracket above $201,775 ($403,550 joint). [6] So $5,000 of phantom income from a $50,000 break-even year costs $1,100 at 22%, $1,200 at 24% and $1,600 at 32%. The $10,000 from a $100,000 break-even year costs $2,200, $2,400 or $3,200 at the same rates. State income tax, where your state taxes winnings, comes on top. The calculator runs your own winnings, losses and filing status and shows the phantom income and the tax on it.
Can I deduct gambling losses if I take the standard deduction?
No. Gambling losses are deductible only on Schedule A. If you take the standard deduction, $16,100 single or $32,200 married filing jointly for 2026 ($15,750 and $31,500 for 2025), you deduct $0 of losses and still report every dollar of winnings on Schedule 1. [3] [6] A gambler who wins $50,000 and loses $50,000 in 2026 but takes the standard deduction owes tax on the full $50,000. Publication 529 closes the other door: “You can't reduce your gambling winnings by your gambling losses and report the difference.” [4]
The decision is arithmetic. Itemize when 90% of your losses (never more than your winnings) plus your other itemized deductions is larger than your standard deduction. With no other itemized deductions, a 2026 filer needs about $17,889 of losses to clear the $16,100 single standard deduction ($16,100 divided by 0.9), about $26,833 head of household and about $35,778 married filing jointly, and at least that much in winnings for the losses to count. Those thresholds are our division of the IRS amounts, not IRS figures. [6] Other itemized deductions lower them: state and local taxes, capped at $40,400 for 2026 ($20,200 married filing separately, phased down above $505,000 of income but never below $10,000) [8], mortgage interest, charitable gifts and medical costs above the floor.
| 2026 example | Winnings reported | Deductible losses (90%) | Other itemized | Itemized total | Standard deduction | Better choice | What is taxed |
|---|---|---|---|---|---|---|---|
| A. Single, $20,000 won, $20,000 lost | $20,000 | $18,000 | $0 | $18,000 | $16,100 | Itemize | $20,000 of winnings less $18,000 of losses, and the $16,100 standard deduction is given up: taxable income rises $18,100 |
| B. Single, $8,000 won, $8,000 lost | $8,000 | $7,200 | $0 | $7,200 | $16,100 | Standard deduction | All $8,000 of winnings; $0 of losses deducted |
| C. Joint, $8,000 won, $8,000 lost, $15,000 other itemized | $8,000 | $7,200 | $15,000 | $22,200 | $32,200 | Standard deduction | All $8,000 of winnings; $0 of losses deducted |
| D. Single, $60,000 won, $60,000 lost, $10,000 state and local tax | $60,000 | $54,000 | $10,000 | $64,000 | $16,100 | Itemize | $60,000 of winnings less $47,900 of extra deduction ($64,000 itemized in place of the $16,100 standard): taxable income rises $12,100 |
Example A shows why itemizing rarely saves as much as it looks: the $18,000 of losses replaces a $16,100 standard deduction the filer already had, so the net benefit of claiming them is $1,900 of extra deduction against $20,000 of extra income. Example B is a small-stakes player: with $8,000 of W-2G winnings and $8,000 of losses, 90% is $7,200, far below $16,100, so the whole $8,000 is taxed even though the year was a wash. In example C the couple's $9,000 of state and local tax and $6,000 of mortgage interest still leave them $10,000 short of the joint standard deduction; if their marginal rate is 22%, the break-even year costs $1,760 of federal tax. Example D is a high-volume player: itemizing wins, but the 10% of losses that no longer count leaves $6,000 of phantom income on a year that broke even.
Married filing jointly: spouses combine wins and losses
Proposed section 1.165-10(b) says that for spouses filing a joint return, “90 percent of the combined losses of the spouses from wagering transactions during the taxable year are allowed as a deduction under section 165(d) only to the extent of the combined gains of the spouses from wagering transactions during that year.” [7] One spouse's losses can therefore offset the other's winnings on a joint return. The rule is in proposed form as of this page's review date; a final regulation could change the wording.
Professional gamblers on Schedule C
The amended section adds that “losses from wagering transactions” include “any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.” [1] For a professional filing on Schedule C, travel, data, entry fees and other business expenses are now inside the same 90%-and-capped-at-gains limit as the wagers themselves. Schedule C is the only route to a loss deduction that does not require itemizing, and it is open only to someone whose gambling is a trade or business. The Supreme Court's test, from Commissioner v. Groetzinger, 480 U.S. 23 (1987), is that gambling “pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby” is a trade or business. [9]
What records prove gambling losses to the IRS?
Topic 419: “To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses” and be able to provide receipts, tickets, statements or other records. [3] Publication 529 lists what the diary shows: the date and type of each wager, the name and address or location of the establishment, the names of other people present, and the amounts won or lost. [4] A win/loss statement (the operator's annual estimate of your tracked wins and losses) from each casino or sportsbook supports the diary; on its own it is an estimate, and the win/loss statement page explains where it falls short. IRS Chief Counsel measures wins and losses by session rather than by individual bet, which is why your reported winnings can legally be smaller than the sum of your W-2Gs; the session method page covers it. [13] The session log template is built around the Publication 529 list.
W-2G changes for 2026
For payments made in calendar year 2026 the Form W-2G reporting threshold is $2,000, up from $1,200 for slots and bingo and $1,500 for keno; the 300-times-the-wager test for other wagers still applies. [5] [7] Regular withholding of 24% applies to winnings (less the wager) of more than $5,000 from sweepstakes, wagering pools, lotteries, parimutuel pools and sports wagering that meet the 300-times test, and backup withholding at 24% applies to slot, bingo and keno payouts when the winner does not give a correct taxpayer identification number. [5] Two things the threshold does not do: it does not decide what you must report, because every dollar of winnings is reportable whether or not a form was issued, and it does not record losses, because the W-2G has no box for them. [5] The thresholds page and the sports betting page have the detail.
Where repeal stands (checked September 28, 2026)
On September 16, 2026 the House Ways and Means Committee voted 38-5 to advance H.R. 10357, the Digital Asset Tax Certainty Act introduced by Rep. Jason Smith, carrying language that would remove the 90% limit and restore the full deduction for gambling losses up to winnings, retroactive to January 1, 2026. [10] The attached language is the FULL HOUSE Act, introduced in the House in January 2026 as H.R. 6985 by Reps. Steven Horsford and Max Miller (Senate version S. 2230, Sen. Catherine Cortez Masto). [15] [16] [17] It makes the same fix as the FAIR BET Act, H.R. 4304, introduced by Rep. Dina Titus with 25 co-sponsors. [11] [12] Our repeal status page tracks every bill. The Joint Committee on Taxation puts the cost at about $2 billion over ten years. [10]
Nothing has been enacted. The House is not scheduled to return until after the November 2026 midterm elections, so there is no floor vote before then; the Senate has not acted; and the President has not signed anything. [10] [12] Until a repeal becomes law, 90% is the rule for 2026 returns, and a player who plans on the full deduction is betting on Congress. This page is updated when the status changes.
State returns
States differ. Some start from federal taxable income and inherit whatever the federal deduction allows; some allow no gambling loss deduction at all; a few have their own rules. Illinois is in the second group: its Department of Revenue says plainly that “Illinois does not allow a deduction for gambling losses,” so an Illinois player taxed on $50,000 of winnings gets no state relief for $50,000 of losses. [14] The state-by-state page covers where you file.
What to do before December 31, 2026
- Start or complete a session log for 2026 now, with the four Publication 529 items for every session. Losses without records are not deductible at any percentage. [4]
- Request a win/loss statement from every casino and sportsbook you used, and reconcile it to your log and your W-2Gs rather than filing from the statement alone.
- Run the itemize-or-not arithmetic above with your filing status and other itemized deductions. If you will not clear the standard deduction, plan for tax on 100% of your winnings.
- Check the repeal status before you file the 2026 return in 2027. If the House and Senate pass the restoring language and it is signed, the 100% deduction would return for 2026; until then, plan on 90%.
Related questions
Can I deduct gambling losses if I take the standard deduction?
No. IRS Topic 419 allows gambling losses only if you itemize on Schedule A. With the standard deduction ($16,100 single, $32,200 joint for 2026) you deduct $0 of losses and still report all winnings on Schedule 1.
Does the 90% limit apply to my 2025 return?
No. It applies to taxable years beginning after December 31, 2025, so the first affected return is the 2026 return filed in 2027.
If I broke even gambling in 2026, do I owe tax?
Usually yes. Win $10,000 and lose $10,000 and you deduct $9,000, leaving $1,000 taxable. If your itemized deductions do not beat the standard deduction, $16,100 single or $32,200 joint for 2026, you deduct nothing and the full $10,000 is taxed.
How much do I need to lose before itemizing beats the standard deduction in 2026?
With no other itemized deductions, about $17,889 of losses (and at least that much in winnings) for a single filer, $26,833 head of household and $35,778 married filing jointly, because only 90% of losses count against standard deductions of $16,100, $24,150 and $32,200. Other itemized deductions lower those figures.
Can I carry unused gambling losses to next year?
No. The statute allows losses only to the extent of gains during the same taxable year. Losses above that year's winnings, and the 10% disallowed for 2026, are simply lost; they do not carry forward or back or offset other income.
Can I subtract losses from winnings and report the net?
No. Winnings are reported in full on Schedule 1. Losses are a separate itemized deduction on Schedule A. Netting is allowed only within a single session of play under the session method, not across the year.
Has the 90% rule been repealed?
Not as of September 28, 2026. On September 16, 2026 the House Ways and Means Committee voted 38-5 to advance H.R. 10357 carrying language that restores the 100% deduction for 2026, but it still needs a House floor vote, Senate passage and the President's signature. Until then, 90% is the law for 2026.
Do married couples combine gambling wins and losses?
Yes, under proposed Treas. Reg. section 1.165-10(b) (REG-113229-25, April 17, 2026): spouses filing jointly combine their wagering losses and gains, and 90% of the combined losses is deductible up to the combined gains. The regulation is proposed, not final.
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Sources
- 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
- IRS Instructions for Schedule A (Form 1040), line 16, Other itemized deductions, tax year 2025 edition
- IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
- IRS Publication 529, Miscellaneous Deductions, Gambling losses up to the amount of gambling winnings, Rev. December 2020
- IRS Instructions for Forms W-2G and 5754, Rev. January 2026
- IRS news release IR-2025-103, tax inflation adjustments for tax year 2026 including amendments from the One Big Beautiful Bill (Rev. Proc. 2025-32), October 9, 2025
- Federal Register, REG-113229-25, proposed regulations including proposed Treas. Reg. § 1.165-10, wagering losses (FR Doc. 2026-07519), published April 17, 2026; comments closed June 16, 2026
- 26 U.S.C. § 164(b)(7), limitation on individual deductions for state and local taxes (Legal Information Institute), as amended for taxable years beginning in 2026
- Commissioner v. Groetzinger, 480 U.S. 23 (Legal Information Institute), decided February 24, 1987
- Covers, House committee advances repeal of 90 percent gambling loss deduction limit, September 16, 2026 (secondary source)
- Yogonet, House committee advances measure to restore full gambling loss tax deduction, September 17, 2026 (secondary source)
- CPA Practice Advisor, Bill to reverse change made to gambling tax code advances in House, September 24, 2026 (secondary source)
- IRS Office of Chief Counsel, AM 2008-011, Reporting of wagering gains and losses, December 12, 2008
- Illinois Department of Revenue, What other income is not allowed as a subtraction?, read September 6, 2026
- Library of Congress bill status, H.R. 6985, FULL HOUSE Act (House), Introduced January 8, 2026
- Library of Congress bill status, S. 2230, FULL HOUSE Act (Senate), Introduced July 9, 2025
- Rep. Max Miller, Reps. Miller and Horsford introduce FULL HOUSE Act to end unfair taxation of gambling losses, January 14, 2026
- IRS, Get an extension to file your tax return (Form 4868), page last reviewed or updated September 20, 2026
Related
- What is the OBBBA 90% gambling loss cap for 2026?
- What is the session method for gambling taxes in 2026?
- Is a casino win/loss statement enough for the IRS?
- Do I have to report sports betting winnings?
- What is the W-2G threshold for 2026?
- Which states tax gambling and sports betting winnings, and which allow losses?
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.