Gamblers will pay more taxes in 2026 and beyond when Trump's 'Big, Beautiful Bill' hits

USA Today

11-07-2025

Gamblers lost a bit of a tax break in the nearly 900-page mega tax-and-spending bill that President Donald Trump signed into law July 4.
If you won $1,000 betting on the Super Bowl in 2025, for example, you still could claim up to $1,000 in gambling losses if you itemize all your deductions when you file your federal income tax return next year. And you wouldn't be taxed on that win in this example.
But the game's over when tax rules for gambling change beginning in 2026.
What are the tax rules when it comes to gambling?
What remains true: You can claim gambling losses up to the amount of your winnings only if you itemize all your deductions. Most people don't itemize these days because they get a better tax break by taking the standard deduction.
The amount of losses you can deduct are limited by your winnings. Deductible losses still will not be able to exceed total winnings for the year.
How the new tax law changes things for legal gamblers
What's changed: Beginning in 2026, the tax law shifts just enough to irk plenty of people who dream big by heading to the casino, betting online or buying lottery tickets.
A $1,000 win in 2026 and afterward will mean that you can only deduct 90% of your losses — or $900 in this example. Someone who wins in this example would pay taxes on $100 in winnings in 2026 when they file that year's tax return.
Economic outcomes: Trump's mega tax and spending law will have small economic impact, forecasters say
"Instead of gambling losses being deductible to the full extent of gambling winnings, they're going to be limited to 90%," said Tom O'Saben, enrolled agent and director of tax content and government relations for the National Association of Tax Professionals, which has 23,000 members.
Make no mistake, the new 90% limit has no impact on the 2025 tax returns that will be filed early next year. It would only apply to winnings and losses that take place in 2026 and after.
Casual gamblers cannot deduct expenses related to their lodging, transportation, or food and other incidental expenses during their gambling, Mark Steber, chief tax information officer for Jackson Hewitt Tax Services, told the Detroit Free Press, part of the USA TODAY Network, earlier this year. And that's still true going forward.
Yet, he noted, someone who is a professional gambler and considered self-employed would be eligible to deduct travel and lodging expenses while working.
The new tax law, though, clarifies that any expense related to carrying on gambling activities — such as travel, admission fees and lodging related to professional gambling — would be treated as a gambling loss and then subject to that 90% cap, O'Saben explained in a presentation on July 9 to tax professionals.
As a result, everyone from professional poker players to young gamblers using an app to bet on football are screaming foul and viewing the change as a 10% penalty of sorts.
Some already want to see the new tax rule changed
On July 7, U.S. Rep. Dina Titus introduced legislation to restore the 100% deduction for gamblers. The Nevada Democrat calls her bill the My FAIR BET Act — which calls for "Fair Accounting for Income Realized from Betting Earnings Taxation."
"It gives everyone — from recreational gamblers to high-stakes gamblers — a fair shake," Titus said in a statement.
"We should be encouraging players to properly report their winnings and wager using legal operators. The Senate change will only push people to not report their winnings and to use unregulated platforms.'
The American Gaming Association applauds Titus for introducing the FAIR BET Act, as the group would like to see congressional leaders and the Trump administration restore the long-standing tax treatment of gaming losses, according to a group spokesperson.
The industry group — whose members include DraftKings, MGM Resorts International, Churchill Downs, FireKeepers Casino Hotel, Cherokee Nation Entertainment and other big names — earlier in the spring urged congressional leadership to not only "maintain the deduction for taxpayers who itemize, but — as a matter of fairness — Congress should consider allowing for non-itemizers to net their gambling wins and losses for purposes of reporting adjusted gross income."
"Under current policy," according to the letter sent in May to congressional leaders, "most taxpayers do not itemize and many gaming customers are subject to the mismatch of being taxed on the full amount of their gross gaming wins with no ability to net their losses."
"As a result, those who are in a losing position at the end of the year are in effect being taxed on income they have not received," according to the letter.
Others are speaking out on social media, too.
A Nevada-based tax preparer posted on X that high-stakes gamblers will be hurt if this law with the 90% limit stays in place and goes into effect in 2026.
"But so will the average gambler who 'gets lucky,' " said Russell Fox, whose profile also proclaims that he's a poker player.
"Vegas was built on the dream, and if that dream is removed (or drastically lessened) by a bad law, Vegas will be hurt."
I'd imagine the same would be true for casinos in a million other spots where many people choose to legally gamble.
Contact personal finance columnist Susan Tompor: [e-mail]. Follow her on X @tompor.