Upcoming Gambling Loss Deduction Changes In 2026: What You Need To Know

The “One Big Beautiful Bill Act” & What It Means For Gamblers

If you are a gambler, then you likely are aware that you can deduct your losses on your taxes. While this is a helpful rule, especially if you win a large amount and then lose that amount, the new rule that will come into effect in 2026 can saddle you with some income taxes even if your losses equal your winnings.

Although the change will mainly impact frequent and high-stakes players, it’s important for all gamblers, casual and professional alike, to understand how the new deduction limits will work. By keeping accurate records and consulting an experienced tax lawyer, you can reduce your tax liability and stay compliant with IRS requirements.
The following blog will help you understand the new rule under the One Big Beautiful Bill Act and will give you tools to move forward as you gamble in 2026.

Gambling Loss Deduction Rules & Limitations

Whether you gamble professionally or just for fun, there are specific rules to follow when claiming losses on your taxes to help you avoid IRS audit triggers. Especially given that changes are coming down the pipe with the new One Big Beautiful Bill Act. Understanding the rules will help you better understand how the new rules will affect you.

First of all, you can claim gambling loss deductions, so you do not have to pay taxes on everything that you won, even if you lost just as much. This helps prevent getting taxed on what’s known as “phantom income”. For instance, if you won $50,000 in a year and then lost $50,000 in the same year, you will not be taxed for your winnings, despite losing it all.

However, there are limits. Your loss deductions are capped by how much you won in a year. If you won $50,000 during the year, but lost $60,000, you will only be able to claim $50,000 in losses, and the extra $10,000 will vanish. At least, that is how it was in 2025.

2026 Gambling Tax Law Changes: How The New Rules Limit Loss Deductions

In 2025, the One Big Beautiful Bill Act was enacted, which made a significant change to deducting gambling losses. The change affects everyone, but will have a more negative impact on high rollers. It will begin January 1, 2026. The new rule will impact how much loss you can deduct and will cause individuals to rethink some of their tax compliance strategies.

Prior to 2025, gamblers were able to deduct 100% of their losses (up to the amount they won). In 2026, they will only be able to deduct 90% of their losses. For instance, if you lose $50,000, you will only be able to deduct $45,000 on your taxes.

How The OBBBA Causes Gamblers To Owe Taxes Even When You Break Even

This new rule now makes being taxed on “phantom income” a possibility. It means that even if your losses ($50,000) are the same as your winnings ($50,000), you could still be taxed on some winnings (90% of $50,000 = $5,000 of taxable “phantom income”), even if they do not exist.

The players who will be hit the hardest will be those who frequently win and lose big. Those who run large volumes of bets throughout the year. Even if these players break even, the new rule could saddle these players with hundreds of thousands of dollars in taxes on money they never actually kept.

How To Deduct Gambling Losses: Casual vs. Professional Gamblers

Despite the new rules, you can and should still deduct losses from your taxes using record-keeping best practices. However, claiming gambling losses on your taxes differs based on which type of gambler you are:

• Amateur Gambling Loss Deductions: To claim losses, you must itemize deductions instead of claiming the standard deduction. Doing so means you should keep a careful record of everything.
• Professional Gambling Loss Deductions: For those who gamble professionally, all of your activity is seen as a business, and you will be reporting both losses and wins on Schedule C.

Keeping Records For Gambling Loss Deductions

Gambling loss deductions are high-risk tax deductions, and the IRS has always been rather strict when it comes to them. That’s why it’s important to keep detailed records of your wins and losses. These records could make the difference between keeping your deductions or losing them in an audit. Here are a few record-keeping habits that can help protect your deductions:

• Keep a gambling logbook: Include date and time, type of activity, location, amount won or lost, and names of people with you.
• Save any supporting documents: Keep a careful track of any documents you get when receiving your winnings, like W-2G forms, Form 1099-MISC, lottery tickets, and ATM or bank withdrawal slips linked to gambling.
• Take photos along the way: After any significant win or loss, take photos of your winning or losing tickets, chip receipts, or bet slips.
• Track Sessions: The IRS will be looking at your sessions, not your individual bets, so make sure you keep a good track of these sessions.
• Keep Bank Records Consistent: It can be helpful to designate a bank account or card specifically for your gambling to keep a clean record of your activity.

Hire Our Experienced Tax Lawyers To Handle Your Gambling Loss Deductions

If you are concerned about the new rule and how it will affect your gambling, reach out to our lawyers at Silver Law PLC. We have years of experience and make it our mission to understand every change that happens so you can avoid IRS audit triggers and have peace of mind moving forward in your complex tax situations.

Reach out to our lawyers today and discover how you can protect yourself financially amidst all the changes.