New 2026 Gambling Tax Changes Could Leave Bettors Owing More

Thinking about placing a sports bet or spending time at a casino in 2026? A new federal tax law that took effect at the start of the year could significantly increase what some gamblers owe, even if they don’t walk away with any net winnings.

Effective Jan. 1, 2026, gamblers will only be allowed to deduct 90% of their gambling losses on their federal tax returns. At the same time, 100% of gambling winnings will continue to be taxed as income. The result is a situation where bettors can break even over the course of the year and still face a tax bill.

To put the change into perspective, consider a gambler who records $100,000 in losses and $100,000 in winnings during 2026. Despite earning no net income, only $90,000 of those losses would be deductible under the new rule. That leaves $10,000 counted as taxable income.

This structure means that even gamblers with relatively modest annual gains could see those winnings wiped out by taxes if they place a large volume of losing bets during the year. The change applies nationwide, affecting bettors in all 50 states and covering all sports bets and casino games, whether played online or in person.

While gamblers in the U.S. are subject to the changes, in countries such as the Netherlands, players do not pay tax on winnings from licensed operators such as those found on platforms such as casinobonusdeals.io. 

The new rules are part of the One Big Beautiful Bill, which was signed into law in July. While the changes will reshape gambling taxes going forward, wagers placed in 2025 remain subject to the current rules. As a result, the upcoming tax season will be the last time gamblers can deduct 100% of their losses against their winnings. Importantly, the changes only affect federal taxes owed to the IRS. State-level rules on gambling winnings and losses remain unchanged.

How the Loss Deduction Cap Changes the Math

Under the existing system, gamblers can deduct losses up to 100% of their winnings, provided they itemize their deductions. Starting in 2026, that cap drops to 90% of winnings, creating what tax professionals often describe as “phantom” income.

For example, a taxpayer who has $50,000 in gambling winnings and $50,000 in gambling losses in 2026 would effectively leave the casino with nothing. However, because only $45,000 of those losses could be deducted, that individual would owe taxes on $5,000 of income they never actually received.

The impact could be particularly severe for professional or high-volume gamblers who make hundreds or thousands of wagers each year. Their margins are often thin, with large totals in both the win and loss columns. Under the new rule, it’s possible for a gambler to have an overall losing year and still owe federal income taxes on their play.

Given the tighter deduction limits, keeping detailed and accurate records of all gambling activity will be more important than ever. Without thorough documentation, gamblers could face even higher taxable income than expected.

Slot Jackpot Reporting Threshold Nearly Doubles

The One Big Beautiful Bill also includes a change that many in the casino industry have been pushing for years. Starting in 2026, the federal reporting threshold for certain gambling winnings, including slot machine jackpots, will increase from $1,200 to $2,000.

The IRS has now confirmed the update in its guidance for filing Form W-2G. “For calendar years after 2025, the minimum threshold amount for reporting certain payments and backup withholding on certain information returns, including the Form W-2G, will be adjusted yearly for inflation,” the agency stated. “The minimum threshold amount for payments made in calendar year 2026 is $2,000.”

The new $2,000 threshold took effect Jan. 1 and will be adjusted annually for inflation after that. While the higher limit is expected to reduce the number of W-2G forms issued and ease administrative burdens for casinos, all gambling winnings remain fully taxable, regardless of whether a form is issued.

It took months for the IRS to formally confirm the change, leaving casinos uncertain about how to prepare. State regulators will now need to update their own rules, a process that could slow adoption at some properties. As a result, it may take some casinos longer to be fully aligned with the new threshold.

Long-Delayed Update Draws Mixed Reactions

The slot jackpot reporting threshold had been stuck at $1,200 since 1977, even as inflation steadily eroded its value. According to the Bureau of Labor Statistics’ inflation calculator, $1,200 in 1977 would be worth nearly $6,400 in 2025 dollars.

Casino operators have long argued that the outdated threshold created unnecessary disruptions, including shutting down machines for extended periods after relatively small jackpots. Industry groups had pushed for a higher cutoff, some as high as $5,000.

While the increase to $2,000 has been welcomed as progress, criticism remains. The 90% cap on gambling loss deductions has also sparked backlash among bettors and industry advocates, who warn it could reduce wagering activity. A push to repeal that provision, led by Nevada Rep. Dina Titus, failed in September.

Having ushered in the new year, gamblers now face a mixed landscape: a long-overdue update to slot jackpot reporting, paired with a tax change that could make betting significantly more expensive, even for those who don’t come out ahead.