On July 4, 2025, the One Big Beautiful Bill (OBBB) Act became law, bringing several tax changes that will affect individual taxpayers. One of the biggest changes impacts how you can deduct gambling losses on your tax return.
Let’s break down what’s changing, why it matters, and how it could leave you with a tax bill even if you didn’t come out ahead at the casino.
How Gambling Loss Deductions Work Now
Right now, the IRS only lets you deduct gambling losses up to the amount of your gambling winnings. That means:
- If you win $5,000 and lose $7,000, you can only deduct $5,000.
- Any extra losses can’t reduce your taxable income.
And this doesn’t just apply to the actual bets you place—it also covers related expenses like:
- Travel to and from a casino
- Lodging during a gambling trip
- Meals while gambling
Since 2018, these rules have been in place temporarily, and they were set to expire after 2025.
What’s Changing Under the One Big Beautiful Bill Act
The OBBBA makes these gambling loss rules permanent and adds a new twist starting in 2026:
- You can still only deduct losses up to the amount of your winnings.
- But now, you can only deduct 90% of your losses—even if your winnings and losses are the same.
Before & After: Gambling Loss Deduction Rules
| Scenario | Before 2026 (Current Law) | After 2026 (OBBB Act) |
|---|---|---|
| Winnings: $100,000 Losses: $100,000 |
Deduction = $100,000 Taxable Income = $0 |
Deduction = $90,000 Taxable Income = $10,000 |
| Winnings: $50,000 Losses: $40,000 |
Deduction = $40,000 Taxable Income = $10,000 |
Deduction = $36,000 Taxable Income = $14,000 |
| Winnings: $20,000 Losses: $25,000 |
Deduction = $20,000 Taxable Income = $0 |
Deduction = $18,000 Taxable Income = $2,000 |
Example of the New Rule in Action
Imagine you:
- Win $100,000 at the poker table
- Lose $100,000 in other games that year
Today: You’d break even for tax purposes—no income to report.
Starting in 2026: You can only deduct 90% of your losses ($90,000), which means you’d have $10,000 in taxable income even though you didn’t actually make money.
Why This Matters for Gamblers
This change could create taxable income when you don’t have actual profits, which means:
- Higher taxes for frequent gamblers
- The need to track every win and loss carefully
- Potential surprises at tax time
If gambling is part of your lifestyle or business, it’s important to plan ahead for this new rule.
Frequently Asked Questions About Gambling Loss Deductions
1. Can I still deduct all my gambling losses?
No. Starting in 2026, you can only deduct 90% of your losses—and only up to the amount of your winnings.
2. Do gambling loss deductions apply to all types of gambling?
Yes. The rules apply to casino games, sports betting, poker tournaments, lottery tickets, horse racing, and other forms of legal gambling.
3. Can I deduct expenses like travel and lodging?
Yes—but they still count toward the total limit of your gambling loss deduction. If you travel to a casino, your hotel and gas expenses are only deductible up to your winnings and within the 90% rule starting in 2026.
4. What records do I need to claim the deduction?
Keep detailed records of:
- Dates and types of wagers
- Amounts won and lost
- Receipts for related expenses
- Casino statements or win/loss reports
5. Does this change apply to professional gamblers?
Yes. Even professional gamblers must follow the same 90% limit starting in 2026.
Key Takeaways
- The gambling loss deduction rules are now permanent.
- Starting in 2026, you can only deduct 90% of your losses against winnings.
- Even breaking even could result in taxable income.
- Accurate recordkeeping is more important than ever.
If you have questions about the gambling loss deduction or any of the changes in the OBBBA, contact us or download our chart with the key provisions from the OBBBA.