WOYALE.
Gambling losses are deductible only if you itemize, and only up to the amount of your gambling winnings in the same year. For tax years beginning after December 31, 2025, the deduction is also limited to 90% of your losses. Because winnings are fully taxed and losses are not fully deductible, you can owe tax in a year when you broke even or lost money overall.
This is general information, not tax advice. A CPA can tell you what applies to your return.
The three limits
First, you must itemize. Losses go on Schedule A, as an “other itemized deduction.” If you take the standard deduction, your gambling losses do nothing. The 2026 standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly and $24,150 for heads of household (Rev. Proc. 2025-32). Your itemized total, with gambling losses included, has to beat that figure before itemizing helps.
Second, losses can’t exceed winnings. The IRS says you can claim losses up to the amount of winnings you reported. Excess losses disappear. There is no carryforward to next year.
Third, from 2026 only 90% counts. The One Big Beautiful Bill Act (Pub. L. 119-21, signed July 4, 2025) rewrote 26 U.S.C. 165(d). For tax years beginning after December 31, 2025, the deduction for wagering losses:
- equals 90% of the losses for the year, and
- is allowed only to the extent of the year’s wagering gains.
The statute adds that “losses from wagering transactions” include any other deduction you incur in carrying on a wagering transaction. Section 165(d) as amended has no carve-out for professional gamblers, and the added language pulls business expenses of wagering into the same 90% limit. If you bet as a business, ask a tax professional how it applies to you.
Winnings stay fully taxable, while only part of the losses can be deducted. That mismatch is what changed.
Worked example: a break-even year
Assume a single filer in the 24% bracket who already itemizes with $20,000 of other deductions, so each dollar of gambling loss deduction is extra.
During 2026 you win $20,000 in total and lose $20,000 in total. Net result: you are exactly even.
| Old rule (100%) | 2026 rule (90%) | |
|---|---|---|
| Winnings reported | $20,000 | $20,000 |
| Losses | $20,000 | $20,000 |
| Deduction allowed | $20,000 | $18,000 |
| Extra taxable income | $0 | $2,000 |
| Federal tax at 24% | $0 | $480 |
You are out $480 in a year where you made nothing.
If you take the standard deduction instead, none of the $20,000 loss helps and you owe tax on the full $20,000 of winnings, about $4,800 at 24%.
When the 90% rule bites and when it doesn’t
The allowed deduction is the smaller of 90% of losses and your winnings. So:
| Winnings | Losses | 90% of losses | Deduction | Winnings left taxable |
|---|---|---|---|---|
| $30,000 | $10,000 | $9,000 | $9,000 | $21,000 |
| $10,000 | $10,500 | $9,450 | $9,450 | $550 |
| $10,000 | $12,000 | $10,800 | $10,000 | $0 |
The third row shows the exception. When your losses are at least about 111% of your winnings (winnings divided by 0.9), 90% of losses already covers all of the winnings, and the cap on winnings does the work instead. The first two rows show the usual result: a small slice of winnings stays taxable.
Side effects of the extra income
The 10% of losses you cannot deduct still counts as income and raises your adjusted gross income. That can push up tax on Social Security benefits, reduce some credits and phase-outs, and affect Medicare premiums and health-insurance subsidy calculations. These effects depend on your whole return.
Will the 90% rule be repealed?
Possibly, but as of October 22, 2026 it is still the law. The bill that would repeal it is the FAIR BET Act (H.R. 4304), introduced July 7, 2025 by Rep. Dina Titus. It would change “90 percent” back to “100 percent” in Section 165(d). Its status on Congress.gov:
- It was referred to the House Ways and Means Committee and has not left committee.
- On February 12, 2026 Rep. Titus filed a discharge petition to bring it to the House floor.
- It has not passed the House or the Senate.
A repeal could still be enacted later and apply to tax years beginning after 2025. Check Congress.gov for current status before you file.
State returns
States differ. Some follow the federal itemizing rules, some let you net losses against winnings differently, and some do not allow a gambling loss deduction at all. Check your state’s rules or ask your preparer.
What proves a loss
The IRS expects an accurate diary or similar record, plus supporting documents. For crypto bettors that means more than a screenshot of a balance. See Records to keep. For how the winnings side works, start with Crypto gambling winnings.
Common questions
Can I deduct a loss from a book that isn’t licensed in my state?
The statute speaks of losses from wagering transactions and does not say licensed ones only. Whether and how to claim them is a question for a tax professional. Legality is a separate matter; see Are offshore sportsbooks legal?.
Do I net my wins and losses and report the difference?
No. The IRS wants total winnings on the income line and total losses on Schedule A. Netting inside the year is the wrong way to report it, and it removes the loss figure that Schedule A needs.
Can I carry unused losses to next year?
No. A loss above your winnings is gone, and so is the 10% the new rule disallows.