Gambling losses deduction in 2026: the 90% rule
For tax years beginning after December 31, 2025, you can deduct 90% of your gambling losses, and never more than your gambling winnings. The deduction is only available if you itemize on Schedule A, so a year in which you broke even can now leave taxable income.
Checked 2026-11-06. Sources: IRS proposed §1.165-10 (IRB 2026-19); IRS Topic 419.
What changed
Before 2026, itemizers could deduct losses up to the full amount of their winnings. The One Big Beautiful Bill Act (P.L. 119-21, section 70114) cut that to 90% of losses, still capped at winnings. The IRS proposed regulation restates it:
"For purposes of losses from wagering transactions, a deduction is allowed under section 165(d) of the Internal Revenue Code 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."
Proposed §1.165-10(a), Internal Revenue Bulletin 2026-19. Joint returns use the spouses' combined losses and gains (§1.165-10(b)); applies to taxable years beginning after December 31, 2025 (§1.165-10(c)).
deductible losses = min(90% × losses, winnings)
Who it affects
Only people who itemize. The IRS notes in the same document that "most taxpayers that report gains from wagering transactions do not itemize deductions and would be unaffected by the statutory change." For itemizers with large turnover, such as frequent sports bettors and poker players, the 10% that is no longer deductible becomes taxable income.
Worked examples (2026)
| Won | Lost | Deductible now | Extra federal tax (2026) | Under the old rule |
|---|---|---|---|---|
| $20,000.00 | $10,000.00 | $9,000.00 | $2,420.00 | $2,200.00 |
| $50,000.00 | $50,000.00 | $45,000.00 | $1,100.00 | $0.00 |
| $50,000.00 | $80,000.00 | $50,000.00 | $0.00 | $0.00 |
| $10,000.00 | $4,000.00 | $3,600.00 | $1,408.00 | $1,320.00 |
Single filer, $80,000.00 other income, $20,000.00 other itemized deductions, 2026 federal brackets. Extra federal tax is the tax caused by the gambling year.
Without other itemized deductions, the standard deduction usually wins: a single filer with $80,000.00 income who won $10,000.00 and lost $8,000.00 deducts nothing and pays $2,200.00 on the winnings. Run your own numbers in the gambling winnings tax calculator.
Broke even? The tax on zero profit
In each case below the player won exactly as much as they lost, so they made nothing. Under the old rule that year added no tax. From 2026, 10% of the losses stays in taxable income:
| Won and lost | Other income $50,000.00 | Other income $100,000.00 | Other income $200,000.00 |
|---|---|---|---|
| $10k | $120.00 | $220.00 | $240.00 |
| $25k | $300.00 | $550.00 | $600.00 |
| $50k | $600.00 | $1,100.00 | $1,200.00 |
| $100k | $1,200.00 | $2,200.00 | $2,400.00 |
| $250k | $3,460.00 | $5,500.00 | $6,258.00 |
| $500k | $8,960.00 | $11,486.00 | $14,258.00 |
| $1M | $20,446.00 | $23,486.00 | $30,971.25 |
Extra 2026 federal income tax, single filer, $20,000.00 other itemized deductions, no state tax. The old rule gives $0 in every cell. The tax grows with turnover, not profit: a player with $200,000.00 income who won and lost $1,000,000.00 owes $30,971.25, at a 35% marginal rate. Download: break-even-gambling-tax-2026.csv (free to use with a link to this page).
Keep records
The IRS allows the deduction only if you "kept a record of your winnings and losses" (Topic 419). Keep win/loss statements from casinos and sportsbook account histories.
Could it change?
Two House bills would undo it: H.R. 4304 would restore the 100% deduction and H.R. 6985 would reinstate the earlier gains-only limit. Neither had passed when we checked on 2026-11-06.
Questions
Can I still deduct gambling losses in 2026?
Yes, if you itemize: 90% of your losses for the year, up to the amount of your gambling winnings.
When does the 90% rule start?
For taxable years beginning after December 31, 2025, so the 2026 return filed in 2027 is the first one affected.
Does the 90% rule apply to married couples filing jointly?
Yes. Under the proposed regulation, 90% of the spouses' combined losses are deductible, up to their combined gains.
Is the 90% rule final?
The rule is in the statute (P.L. 119-21, section 70114). The IRS regulation that restates it is proposed. Bills to restore the full deduction have been introduced in Congress but not passed as of our check.
Do I owe tax if I broke even gambling in 2026?
If you itemize, usually yes: 10% of your losses is no longer deductible, so it is taxed as income. A single filer with $100,000.00 other income who won and lost $100,000.00 owes $2,200.00 extra federal tax; under the old rule the same year cost nothing.
I take the standard deduction. Does this affect me?
No. Without itemizing you cannot deduct gambling losses at all, under the old rule or the new one. In 2026 the standard deduction is $16,100.00 for single filers and $32,200.00 for married couples filing jointly.
21+ in most states. If gambling stops being fun, free confidential help is available 24/7: call or text 1-800-GAMBLER (National Council on Problem Gambling).
Sources
- Rev. Proc. 2025-32, section 4.01 (2026 tax rate tables) and 4.14 (standard deduction)
- IRS proposed §1.165-10, Internal Revenue Bulletin 2026-19 (90% wagering loss limit, P.L. 119-21 §70114)
- Instructions for Forms W-2G and 5754 (Rev. January 2026)
- IRS Topic no. 419, Gambling income and losses
Checked 2026-11-06. The 90% rule is law (P.L. 119-21); the IRS regulation implementing it is still proposed. Bills to restore the 100% deduction have been introduced in Congress but not passed. This is an estimate for planning, not tax advice; a tax professional can check your full return.