Latest news with #TomOSaben
Yahoo
11-07-2025
- Business
- Yahoo
Gamblers will pay more taxes in 2026 and beyond when Trump's 'Big, Beautiful Bill' hits
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 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. 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. 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: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Tax break to change for gambling with Trump's 'Big, Beautiful Bill' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11-07-2025
- Business
- Yahoo
Who will — and won't — benefit from the bigger SALT deduction
For the next five years, there will be a much more generous state and local tax deduction available to federal income tax filers, thanks to the recently enacted mega tax-and-spending-cuts law. The new law lifts what had been a $10,000 cap to $40,000 for tax year 2025 and then adjusts it upward by 1% a year for 2026, 2027, 2028 and 2029. The SALT deduction, as it is known, enables federal income tax filers to deduct either their state and local income taxes or their state and local general sales taxes. On top of that, they are also allowed to deduct their property taxes, assuming their income or sales taxes don't put them over the cap. But the increased cap may only help a minority of federal income filers. Here's a breakdown of who will benefit, who will not — as well as those who won't benefit from the change, but are still better off. Itemizers: The SALT break may only be taken by those who itemize deductions on their federal returns. Prior to 2017, there was no cap on the SALT deduction, but the 2017 Tax Cuts and Jobs Act capped it at $10,000 for everyone, while at the same time greatly expanding the standard deduction. Typically, the only reason to itemize your deductions is if, combined, they exceed your standard deduction. The net effect of those two changes together is that far fewer filers chose to itemize, in favor of taking the standard deduction. 'Before 2017, 80% of my clients would itemize. Now 80% take the standard deduction,' said Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals. As a result of the latest change, O'Saben expects some of his clients to resume itemizing, but not nearly as many as did before 2017. That's because the new law further expands the standard deduction for 2025 to $15,750 for single filers, up from the $15,000 previously scheduled for this year; $23,625, up from $22,500, for heads of household; and $31,500 for married couples filing jointly, up from $30,000. And those amounts will be adjusted for inflation in subsequent years. Filers living in high-tax areas: Filers from high-tax states — such as California, New York and Illinois — or high-tax cities are likely to benefit most from the SALT cap increase, assuming their income makes them eligible to claim as much as $40,000 (see next item). That's especially the case for homeowners in these areas, because they are more likely to itemize thanks to the combination of their state and local tax deduction plus their mortgage interest deduction. But even some filers in states that don't impose an income tax but do levy high sales or property taxes could benefit as well, O'Saben noted. Filers making less than $500,000: The new SALT provision limits who may deduct the full $40,000 to tax filers with modified adjusted gross incomes of $500,000 or less. (MAGI in this instance is defined as your US-based income plus any earned income you made in Puerto Rico, Guam, the Northern Mariana Islands and foreign countries for which you'd ordinarily get a tax credit or exemption.) Filers with MAGIs over $500,000 but less than $600,000: This group will be allowed to take more than a $10,000 deduction but less than the $40,000 cap. Their deduction will be reduced by 30% of the amount their income exceeds $500,000. So for example, if your MAGI is $550,000, you will be allowed to deduct $25,000 ($40,000-30% of $50,000). Those with MAGIs of at least $600,000: The SALT deduction will be limited to $10,000 for anyone whose MAGI is $600,000 or more. Filers who don't itemize: Anyone whose itemized deductions — including the state and local taxes they pay — do not exceed the standard deduction won't benefit from the higher SALT cap, but they will still benefit from the higher standard deduction and the fact that taking it will reduce their tax bill more than if they itemized. Partners and shareholders in pass-through entities: Partners and shareholders in businesses that are structured as 'pass-through entities' (e.g. LLCs or S-Corps) typically pay the businesses' taxes on their individual returns. If they do, the rules that dictate who may deduct up to $40,000 in state and local taxes would apply to them. But many don't have to worry about the SALT cap at all. That's because in the wake of the 2017 tax law, which imposed the $10,000 cap, many states developed a workaround for pass-through entities that allowed (or in some cases mandated) the entities to pay the state taxes, and get an unlimited deduction for them at the entity level. That then lowers the federal taxable income for the partners and shareholders. Those workarounds had the effect of letting the partners or shareholders avoid the SALT cap altogether. 'Typically the pass-through entity doesn't pay taxes at all. But in some states passthroughs can elect to be taxed instead,' said Brian Newman, the federal tax services practice leader at CohnReznick Advisory LLC. While this has complicated pass-through entity taxation, Newman noted, 'it's been a huge benefit for partners and shareholders.' Earlier versions of the tax-and-spending-cuts package would have curtailed the benefits of the state workarounds for specified trades and businesses. But the final Senate version, which is what ultimately became law, did not, Newman said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNN
11-07-2025
- Business
- CNN
Who will — and won't — benefit from the bigger SALT deduction
For the next five years, there will be a much more generous state and local tax deduction available to federal income tax filers, thanks to the recently enacted mega tax-and-spending-cuts law. The new law lifts what had been a $10,000 cap to $40,000 for tax year 2025 and then adjusts it upward by 1% a year for 2026, 2027, 2028 and 2029. The SALT deduction, as it is known, enables federal income tax filers to deduct either their state and local income taxes or their state and local general sales taxes. On top of that, they are also allowed to deduct their property taxes, assuming their income or sales taxes don't put them over the cap. But the increased cap may only help a minority of federal income filers. Here's a breakdown of who will benefit, who will not — as well as those who won't benefit from the change, but are still better off. Itemizers: The SALT break may only be taken by those who itemize deductions on their federal returns. Prior to 2017, there was no cap on the SALT deduction, but the 2017 Tax Cuts and Jobs Act capped it at $10,000 for everyone, while at the same time greatly expanding the standard deduction. Typically, the only reason to itemize your deductions is if, combined, they exceed your standard deduction. The net effect of those two changes together is that far fewer filers chose to itemize, in favor of taking the standard deduction. 'Before 2017, 80% of my clients would itemize. Now 80% take the standard deduction,' said Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals. As a result of the latest change, O'Saben expects some of his clients to resume itemizing, but not nearly as many as did before 2017. That's because the new law further expands the standard deduction for 2025 to $15,750 for single filers, up from the $15,000 previously scheduled for this year; $23,625, up from $22,500, for heads of household; and $31,500 for married couples filing jointly, up from $30,000. And those amounts will be adjusted for inflation in subsequent years. Filers living in high-tax areas: Filers from high-tax states — such as California, New York and Illinois — or high-tax cities are likely to benefit most from the SALT cap increase, assuming their income makes them eligible to claim as much as $40,000 (see next item). That's especially the case for homeowners in these areas, because they are more likely to itemize thanks to the combination of their state and local tax deduction plus their mortgage interest deduction. But even some filers in states that don't impose an income tax but do levy high sales or property taxes could benefit as well, O'Saben noted. Filers making less than $500,000: The new SALT provision limits who may deduct the full $40,000 to tax filers with modified adjusted gross incomes of $500,000 or less. (MAGI in this instance is defined as your US-based income plus any earned income you made in Puerto Rico, Guam, the Northern Mariana Islands and foreign countries for which you'd ordinarily get a tax credit or exemption.) Filers with MAGIs over $500,000 but less than $600,000: This group will be allowed to take more than a $10,000 deduction but less than the $40,000 cap. Their deduction will be reduced by 30% of the amount their income exceeds $500,000. So for example, if your MAGI is $550,000, you will be allowed to deduct $25,000 ($40,000-30% of $50,000). Those with MAGIs of at least $600,000: The SALT deduction will be limited to $10,000 for anyone whose MAGI is $600,000 or more. Filers who don't itemize: Anyone whose itemized deductions — including the state and local taxes they pay — do not exceed the standard deduction won't benefit from the higher SALT cap, but they will still benefit from the higher standard deduction and the fact that taking it will reduce their tax bill more than if they itemized. Partners and shareholders in pass-through entities: Partners and shareholders in businesses that are structured as 'pass-through entities' (e.g. LLCs or S-Corps) typically pay the businesses' taxes on their individual returns. If they do, the rules that dictate who may deduct up to $40,000 in state and local taxes would apply to them. But many don't have to worry about the SALT cap at all. That's because in the wake of the 2017 tax law, which imposed the $10,000 cap, many states developed a workaround for pass-through entities that allowed (or in some cases mandated) the entities to pay the state taxes, and get an unlimited deduction for them at the entity level. That then lowers the federal taxable income for the partners and shareholders. Those workarounds had the effect of letting the partners or shareholders avoid the SALT cap altogether. 'Typically the pass-through entity doesn't pay taxes at all. But in some states passthroughs can elect to be taxed instead,' said Brian Newman, the federal tax services practice leader at CohnReznick Advisory LLC. While this has complicated pass-through entity taxation, Newman noted, 'it's been a huge benefit for partners and shareholders.' Earlier versions of the tax-and-spending-cuts package would have curtailed the benefits of the state workarounds for specified trades and businesses. But the final Senate version, which is what ultimately became law, did not, Newman said.
CNN
11-07-2025
- Business
- CNN
Who will — and won't — benefit from the bigger SALT deduction
For the next five years, there will be a much more generous state and local tax deduction available to federal income tax filers, thanks to the recently enacted mega tax-and-spending-cuts law. The new law lifts what had been a $10,000 cap to $40,000 for tax year 2025 and then adjusts it upward by 1% a year for 2026, 2027, 2028 and 2029. The SALT deduction, as it is known, enables federal income tax filers to deduct either their state and local income taxes or their state and local general sales taxes. On top of that, they are also allowed to deduct their property taxes, assuming their income or sales taxes don't put them over the cap. But the increased cap may only help a minority of federal income filers. Here's a breakdown of who will benefit, who will not — as well as those who won't benefit from the change, but are still better off. Itemizers: The SALT break may only be taken by those who itemize deductions on their federal returns. Prior to 2017, there was no cap on the SALT deduction, but the 2017 Tax Cuts and Jobs Act capped it at $10,000 for everyone, while at the same time greatly expanding the standard deduction. Typically, the only reason to itemize your deductions is if, combined, they exceed your standard deduction. The net effect of those two changes together is that far fewer filers chose to itemize, in favor of taking the standard deduction. 'Before 2017, 80% of my clients would itemize. Now 80% take the standard deduction,' said Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals. As a result of the latest change, O'Saben expects some of his clients to resume itemizing, but not nearly as many as did before 2017. That's because the new law further expands the standard deduction for 2025 to $15,750 for single filers, up from the $15,000 previously scheduled for this year; $23,625, up from $22,500, for heads of household; and $31,500 for married couples filing jointly, up from $30,000. And those amounts will be adjusted for inflation in subsequent years. Filers living in high-tax areas: Filers from high-tax states — such as California, New York and Illinois — or high-tax cities are likely to benefit most from the SALT cap increase, assuming their income makes them eligible to claim as much as $40,000 (see next item). That's especially the case for homeowners in these areas, because they are more likely to itemize thanks to the combination of their state and local tax deduction plus their mortgage interest deduction. But even some filers in states that don't impose an income tax but do levy high sales or property taxes could benefit as well, O'Saben noted. Filers making less than $500,000: The new SALT provision limits who may deduct the full $40,000 to tax filers with modified adjusted gross incomes of $500,000 or less. (MAGI in this instance is defined as your US-based income plus any earned income you made in Puerto Rico, Guam, the Northern Mariana Islands and foreign countries for which you'd ordinarily get a tax credit or exemption.) Filers with MAGIs over $500,000 but less than $600,000: This group will be allowed to take more than a $10,000 deduction but less than the $40,000 cap. Their deduction will be reduced by 30% of the amount their income exceeds $500,000. So for example, if your MAGI is $550,000, you will be allowed to deduct $25,000 ($40,000-30% of $50,000). Those with MAGIs of at least $600,000: The SALT deduction will be limited to $10,000 for anyone whose MAGI is $600,000 or more. Filers who don't itemize: Anyone whose itemized deductions — including the state and local taxes they pay — do not exceed the standard deduction won't benefit from the higher SALT cap, but they will still benefit from the higher standard deduction and the fact that taking it will reduce their tax bill more than if they itemized. Partners and shareholders in pass-through entities: Partners and shareholders in businesses that are structured as 'pass-through entities' (e.g. LLCs or S-Corps) typically pay the businesses' taxes on their individual returns. If they do, the rules that dictate who may deduct up to $40,000 in state and local taxes would apply to them. But many don't have to worry about the SALT cap at all. That's because in the wake of the 2017 tax law, which imposed the $10,000 cap, many states developed a workaround for pass-through entities that allowed (or in some cases mandated) the entities to pay the state taxes, and get an unlimited deduction for them at the entity level. That then lowers the federal taxable income for the partners and shareholders. Those workarounds had the effect of letting the partners or shareholders avoid the SALT cap altogether. 'Typically the pass-through entity doesn't pay taxes at all. But in some states passthroughs can elect to be taxed instead,' said Brian Newman, the federal tax services practice leader at CohnReznick Advisory LLC. While this has complicated pass-through entity taxation, Newman noted, 'it's been a huge benefit for partners and shareholders.' Earlier versions of the tax-and-spending-cuts package would have curtailed the benefits of the state workarounds for specified trades and businesses. But the final Senate version, which is what ultimately became law, did not, Newman said.
CNN
11-07-2025
- Business
- CNN
Who will — and won't — benefit from the bigger SALT deduction
For the next five years, there will be a much more generous state and local tax deduction available to federal income tax filers, thanks to the recently enacted mega tax-and-spending-cuts law. The new law lifts what had been a $10,000 cap to $40,000 for tax year 2025 and then adjusts it upward by 1% a year for 2026, 2027, 2028 and 2029. The SALT deduction, as it is known, enables federal income tax filers to deduct either their state and local income taxes or their state and local general sales taxes. On top of that, they are also allowed to deduct their property taxes, assuming their income or sales taxes don't put them over the cap. But the increased cap may only help a minority of federal income filers. Here's a breakdown of who will benefit, who will not — as well as those who won't benefit from the change, but are still better off. Itemizers: The SALT break may only be taken by those who itemize deductions on their federal returns. Prior to 2017, there was no cap on the SALT deduction, but the 2017 Tax Cuts and Jobs Act capped it at $10,000 for everyone, while at the same time greatly expanding the standard deduction. Typically, the only reason to itemize your deductions is if, combined, they exceed your standard deduction. The net effect of those two changes together is that far fewer filers chose to itemize, in favor of taking the standard deduction. 'Before 2017, 80% of my clients would itemize. Now 80% take the standard deduction,' said Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals. As a result of the latest change, O'Saben expects some of his clients to resume itemizing, but not nearly as many as did before 2017. That's because the new law further expands the standard deduction for 2025 to $15,750 for single filers, up from the $15,000 previously scheduled for this year; $23,625, up from $22,500, for heads of household; and $31,500 for married couples filing jointly, up from $30,000. And those amounts will be adjusted for inflation in subsequent years. Filers living in high-tax areas: Filers from high-tax states — such as California, New York and Illinois — or high-tax cities are likely to benefit most from the SALT cap increase, assuming their income makes them eligible to claim as much as $40,000 (see next item). That's especially the case for homeowners in these areas, because they are more likely to itemize thanks to the combination of their state and local tax deduction plus their mortgage interest deduction. But even some filers in states that don't impose an income tax but do levy high sales or property taxes could benefit as well, O'Saben noted. Filers making less than $500,000: The new SALT provision limits who may deduct the full $40,000 to tax filers with modified adjusted gross incomes of $500,000 or less. (MAGI in this instance is defined as your US-based income plus any earned income you made in Puerto Rico, Guam, the Northern Mariana Islands and foreign countries for which you'd ordinarily get a tax credit or exemption.) Filers with MAGIs over $500,000 but less than $600,000: This group will be allowed to take more than a $10,000 deduction but less than the $40,000 cap. Their deduction will be reduced by 30% of the amount their income exceeds $500,000. So for example, if your MAGI is $550,000, you will be allowed to deduct $25,000 ($40,000-30% of $50,000). Those with MAGIs of at least $600,000: The SALT deduction will be limited to $10,000 for anyone whose MAGI is $600,000 or more. Filers who don't itemize: Anyone whose itemized deductions — including the state and local taxes they pay — do not exceed the standard deduction won't benefit from the higher SALT cap, but they will still benefit from the higher standard deduction and the fact that taking it will reduce their tax bill more than if they itemized. Partners and shareholders in pass-through entities: Partners and shareholders in businesses that are structured as 'pass-through entities' (e.g. LLCs or S-Corps) typically pay the businesses' taxes on their individual returns. If they do, the rules that dictate who may deduct up to $40,000 in state and local taxes would apply to them. But many don't have to worry about the SALT cap at all. That's because in the wake of the 2017 tax law, which imposed the $10,000 cap, many states developed a workaround for pass-through entities that allowed (or in some cases mandated) the entities to pay the state taxes, and get an unlimited deduction for them at the entity level. That then lowers the federal taxable income for the partners and shareholders. Those workarounds had the effect of letting the partners or shareholders avoid the SALT cap altogether. 'Typically the pass-through entity doesn't pay taxes at all. But in some states passthroughs can elect to be taxed instead,' said Brian Newman, the federal tax services practice leader at CohnReznick Advisory LLC. While this has complicated pass-through entity taxation, Newman noted, 'it's been a huge benefit for partners and shareholders.' Earlier versions of the tax-and-spending-cuts package would have curtailed the benefits of the state workarounds for specified trades and businesses. But the final Senate version, which is what ultimately became law, did not, Newman said.
