Quick Answer
Quick Answer: For tax years beginning in 2026, you can deduct 90% of your gambling losses, but never more than your gambling winnings for the year, and only if you itemize deductions on Schedule A. Someone who won $10,000 and lost $10,000 can deduct $9,000, so $1,000 of winnings stays taxable even though they broke even. Before 2026, the full $10,000 could be deducted. The rule comes from IRC section 165(d) as amended by the One Big Beautiful Bill Act, section 70114.
Key Takeaways
- Deductible losses = the smaller of 90% of your losses or your winnings
- The rule applies to taxable years beginning after December 31, 2025
- You must itemize; with the standard deduction, losses do not reduce your tax
- Breaking even can still leave taxable winnings, because 10% of your losses no longer counts
- Keep a diary and receipts for both winnings and losses
- A bill to restore the full deduction cleared a House committee in September 2026 but is not law as of October 5, 2026
What Changed for 2026: The 90% Limit
Gambling winnings are taxable income. The IRS says that includes winnings from lotteries, raffles, sports betting, horse races and casinos, as well as the fair market value of prizes such as cars and trips. You report all of them on Schedule 1 (Form 1040), whether or not you receive a Form W-2G.
Losses are where the law changed. Section 70114 of the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) rewrote IRC section 165(d). For any taxable year beginning after December 31, 2025, the deduction for losses from wagering transactions:
- "shall be equal to 90 percent of the amount of such losses during such taxable year, and
- shall be allowed only to the extent of the gains from such transactions during such taxable year."
In plain terms, you take 90% of your losses first, then cap the result at your winnings. The deduction is the smaller of the two numbers.
| Rule | Tax years 2018-2025 | Tax years 2026 and later |
|---|---|---|
| Share of losses that counts | 100% | 90% |
| Cap | Your gambling winnings | Your gambling winnings |
| Must itemize on Schedule A? | Yes | Yes |
| Expenses of carrying on wagering count as losses? | Yes | Yes |
Professional gamblers
Section 165(d)(2) defines "losses from wagering transactions" to include "any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction." So the expenses of a gambling activity carried on as a business fall under the same 90% limit and the same winnings cap. Before 2026 that definition applied only for 2018 through 2025; the new text has no end date. How a professional gambler reports income and expenses is a question for a tax professional.
Married couples filing jointly
A Treasury and IRS proposed regulation (REG-113229-25, published April 17, 2026) would apply the rule to a joint return by combining both spouses: 90% of their combined losses, up to their combined winnings. It is a proposed rule, not yet final.
Gambling Loss Deduction Worksheet
Enter your total gambling winnings and total gambling losses for the year. The worksheet applies the federal 2026 rule: 90% of your losses, capped at your winnings. Blank fields use the example amounts shown ($10,000 each); a 0 you type is used as 0.
How much of your gambling losses can you deduct?
- 90% of your losses
- Winnings limit
- Winnings still taxed
- Under the pre-2026 rule
Federal only. The deduction counts only if your total itemized deductions beat your standard deduction (Section 5). This is an educational estimate, not tax advice.
Worked Examples
The 90% limit bites hardest when your losses are close to your winnings. Once losses reach about 111% of winnings (winnings divided by 0.9), 90% of the losses covers the winnings in full and the result is the same as under the old rule.
| Winnings | Losses | 90% of losses | Deductible (2026) | Winnings still taxed | Deductible (pre-2026 rule) |
|---|---|---|---|---|---|
| $10,000 | $10,000 | $9,000 | $9,000 | $1,000 | $10,000 |
| $10,000 | $12,000 | $10,800 | $10,000 | $0 | $10,000 |
| $50,000 | $40,000 | $36,000 | $36,000 | $14,000 | $40,000 |
| $5,000 | $0 | $0 | $0 | $5,000 | $0 |
Order matters: the 90% applies to your losses before the winnings cap. With $10,000 won and $12,000 lost, 90% of the losses is $10,800, which the cap cuts to $10,000. Taking 90% of the capped figure instead ($9,000) understates the deduction the statute allows.
Who It Affects: Itemizing vs. the Standard Deduction
The IRS says you may deduct gambling losses "only if you itemize your deductions on Schedule A (Form 1040)," where they go on the line for other itemized deductions. Itemizing only helps when your itemized total is larger than your standard deduction. For 2026, the standard deduction is $16,100 for single filers and married people filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household (IRS Rev. Proc. 2025-32).
That is why the change reaches fewer people than the number of gamblers suggests. In the proposed regulation, Treasury and the IRS estimate that about 2.3 million taxpayers reported gambling winnings for tax year 2022, but fewer than a third of them, about 670,000, also claimed an itemized deduction for gambling losses. They project about 673,000 such deductions for tax year 2026, and estimate that 15% or fewer taxpayers itemize at all.
Example: two filers who each won and lost $10,000
- Single filer, no other itemized deductions: the $9,000 gambling deduction is below the $16,100 standard deduction, so this filer takes the standard deduction. The losses do not reduce their tax, and all $10,000 of winnings stays in income.
- Married couple filing jointly, $28,000 of other itemized deductions (for example, mortgage interest and state and local taxes): $28,000 + $9,000 = $37,000, which is $4,800 more than the $32,200 standard deduction, so itemizing gives them the larger deduction.
To see how the rest of your return adds up, our 2026 standard deduction guide walks through the itemize-or-not decision, and the 2026 tax brackets guide shows the rate that applies to any winnings that stay taxable.
Records to Keep
To deduct losses, the IRS says you must keep "an accurate diary or similar record of your gambling winnings and losses" and be able to show "receipts, tickets, statements, or other records that show the amount of both your winnings and losses." IRS Publication 529 lists what the diary should show:
- The date and type of your specific wager or wagering activity
- The name and address or location of the gambling establishment
- The names of other persons present with you at the gambling establishment
- The amounts you won or lost
The same publication names supporting documents the IRS accepts, including Form W-2G, Form 5754, wagering tickets, canceled checks, credit records, bank withdrawals, and statements of winnings or payment slips from the gambling establishment.
Good records matter more under the 90% rule, not less: the deduction still depends on the full amount of losses you can prove.
Not yet on the IRS gambling page: as of October 5, 2026, IRS Tax Topic 419 (last updated September 24, 2026) still describes the loss limit as the amount of your winnings and does not mention the 90% rule. The statute and the April 2026 proposed regulation both state the 90% limit for 2026. Check the 2026 Schedule A instructions when they are released.
Pending Bills to Restore the Full Deduction
Several bills would put the pre-2026 rule back. None of them is law as of October 5, 2026:
- H.R. 10357 (introduced September 14, 2026). As introduced, its Title VII would rewrite section 165(d) to allow losses "only to the extent of the gains," for taxable years beginning after December 31, 2025, which would reach back to 2026. On September 16, 2026, the House Ways and Means Committee ordered it reported, as amended, by a vote of 38 to 5. Congress.gov lists no House or Senate floor action as of October 5, 2026.
- S. 2230 (introduced July 9, 2025) and H.R. 6985 (introduced January 8, 2026), both titled the FULL HOUSE Act, were referred to committee and show no later action.
If a change becomes law, the numbers on this page would change with it. Until then, the 90% rule is the law for 2026.
Your State May Differ
This guide covers federal income tax only. States set their own rules for gambling winnings and losses, and a state may or may not follow the federal 90% limit. Check your state revenue department's guidance, or ask a tax professional, before you file your state return.
How the Worksheet Calculates
The worksheet multiplies your losses by 90% (rounded to the cent), then takes the smaller of that figure and your winnings, which is the order IRC section 165(d)(1) sets out. "Winnings still taxed" is your winnings minus that deduction. The pre-2026 figure is the smaller of your losses and your winnings, the rule that applied for 2018 through 2025. It does not check whether itemizing beats your standard deduction, apply state rules, or model professional gambling expenses separately.
Frequently Asked Questions
No, not under current federal law. For taxable years beginning after December 31, 2025, IRC section 165(d), as amended by section 70114 of the One Big Beautiful Bill Act, allows a deduction equal to 90% of your gambling losses for the year, and only up to the amount of your gambling winnings for that year. You can claim it only if you itemize deductions on Schedule A.
Yes. The IRS says you may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040). If you take the standard deduction ($16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household in 2026), your gambling losses do not reduce your tax, and all of your gambling winnings stay in your income.
You may. If you won $10,000 and lost $10,000, 90% of your losses is $9,000, so even if you itemize, $1,000 of your winnings stays in taxable income. Under the rule for 2025 and earlier years, the full $10,000 of losses could offset the $10,000 of winnings.
Yes. Section 165(d)(2) says losses from wagering transactions include any deduction otherwise allowable that is incurred in carrying on any wagering transaction, so a professional gambler's expenses of carrying on that activity fall under the same 90% limit and the same winnings limit. A tax professional can explain how this applies to your situation.
Bills have been introduced to restore the full deduction. On September 16, 2026, the House Ways and Means Committee voted 38 to 5 to report H.R. 10357, which as introduced would restore the pre-2026 rule for taxable years beginning after December 31, 2025. As of October 5, 2026, the bill had not passed the House or the Senate. Unless a change becomes law, the 90% rule applies to 2026.
It depends on the state. States set their own rules for gambling winnings and losses, and a state may or may not follow the federal 90% limit. Check your state revenue department's guidance or ask a tax professional before you file your state return.
See the Rest of Your Tax Picture
Gambling winnings add to your income for the year. Use the Paycheck Calculator to check your federal and state withholding on your regular pay, so a taxable win does not leave you short at filing time.
Sources
- Public Law 119-21 (One Big Beautiful Bill Act), section 70114: Extension and Modification of Limitation on Wagering Losses (govinfo.gov) (opens in new tab)
- 26 U.S. Code section 165, Losses (Office of the Law Revision Counsel) (opens in new tab)
- Treasury and IRS proposed regulation REG-113229-25, Extension and Modification of Limitation on Wagering Losses (Federal Register, April 17, 2026) (opens in new tab)
- IRS Tax Topic 419, Gambling Income and Losses (opens in new tab)
- IRS Publication 529, Miscellaneous Deductions (gambling loss records) (opens in new tab)
- IRS: Tax inflation adjustments for tax year 2026 (Rev. Proc. 2025-32) (opens in new tab)
- Congress.gov: H.R. 10357, Digital Asset Tax Certainty Act (119th Congress) (opens in new tab)
- Congress.gov: H.R. 6985, FULL HOUSE Act (119th Congress) (opens in new tab)
- Congress.gov: S. 2230, FULL HOUSE Act (119th Congress) (opens in new tab)
Important Disclaimer
Disclaimer: This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Individual circumstances vary, and you should consult with a qualified tax professional before making decisions about reporting gambling winnings or losses. While we strive for accuracy, tax laws and regulations change frequently; the 90% rule described here could change if pending legislation becomes law, and the IRS has not yet issued final regulations or 2026 forms for it. Data current as of October 2026.