According to the One Big Beautiful Bill Act (OBBBA), beginning in 2026 you can only deduct 90% of your gambling losses to offset gambling winnings. This means that even if your total losses exceeded or equaled your total winnings, you’ll still have taxable income from gambling.
The rules for deducting gambling losses depend on whether you’re a casual gambler or a professional. All winnings, including cash and non-cash prizes, must be reported as income on your federal tax return.
Rules For Casual Gamblers
1 – You must itemize. To deduct losses, you cannot take a standard deduction.
2 – Your losses cannot exceed your winnings. Deductible losses are capped at the lesser of your total winnings or 90% of total losses.
3 – Unused losses cannot be carried forward to offset winnings on future returns.
Rules For Professional Gamblers
1 – Professional gamblers must report their winnings and business expenses on a Sole Proprietor’s Schedule C. This allows you to claim your gambling losses regardless of whether or not you itemize.
2 – Professional gamblers can deduct other gambling related business expenses, such as travel, training materials, and internet costs. However, the OBBBA limits the total deductible amount of your combined losses and business expenses to 90% of your total gambling income.
Keeping Good Records Is Crucial
Regardless of your gambling status, the IRS requires you to keep detailed records to deduct your losses. That documentation should include…
1 – A diary or log of dates, locations, and types of gambling activities.
2 – The amount of your wins and losses.
3 – Supporting documents such as W-2G Forms, tickets, payment slips, and casino statements must be retained.
Let me leave you with this…
The IRS loves to audit gamblers. Most don’t keep reasonable records of their losses. As such, the Service normally collects large amounts of taxes, interest, and penalties on these examinations.
Please allow me to add another factoid that will really make your day. Those Players Cards you use at the casinos aren’t primarily about providing perks.
They’re another tool the IRS uses to choose audit targets.
They passed a law some time ago requiring casinos to provide information by social security number on your individual winnings and losses per quarter. The information obtained from the Players Cards is used for this purpose.
That’s right. Big Brother really is watching.
If you use your card religiously, the government already knows exactly what you won and lost. If you then make the mistake of claiming that you only had a 10% gain from your winnings when the real number was closer to 50%, it will red flag in the IRS System and may lead to an audit.
Keep good records. You may need them.
I’m here if you need to talk.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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