Understanding the 2026 U.S. Gambling Tax Changes: What Every Player Needs to Know

When wagering real money in activities such as sports betting, poker, or online casino games, understanding the tax regulations that can impact financial outcomes is crucial.

Effective Jan. 1, a new federal tax provision will alter how U.S. taxpayers are allowed to deduct gambling losses. This change may result in a higher tax bill for many players, even in cases where they do not experience a net profit for the year.

This article looks at the key aspects of the new tax provision in straightforward language, detailing the impact on various types of players — including those engaging in online gambling—and emphasizes the necessity of choosing well-established and reputable gambling platforms before depositing funds.

Additionally, the following offers practical advice regarding record keeping, tax planning, and implications for players within the broader gambling landscape.

What’s Changing? The 90% Loss Deduction Cap Explained

Historically, U.S. tax policy has allowed gamblers who itemize deductions to offset their gambling winnings with losses, up to the total amount of those winnings. For instance, a player who wins $10,000 and loses $10,000 will report a net taxable income of zero.

However, the tax law enacted in the summer of 2025 introduces a significant modification: beginning in 2026, deductible gambling losses will be capped at 90% of reported winnings.

This means that if a player wins $50,000 but also incurs losses of $50,000, they will only be eligible to deduct $45,000 of those losses. Consequently, this creates a $5,000 liability that is considered taxable income, even though the player’s net result was break-even.

This issue gives rise to what tax professionals refer to as “phantom income,” which is income that is taxed despite a lack of actual profit.

This crucial change affects federal income tax returns and will require players to reflect these changes accurately on their IRS Schedule A and related reporting forms.

Who Is Affected? Casual Players & High-Volume Gamblers Alike

The implications of this tax provision are particularly salient for high-volume and professional gamblers, yet it can also affect casual players who itemize deductions. Even those who experience substantial swings in wins and losses may find themselves impacted by the new rules. 

It is essential to note that most casual players do not itemize deductions and typically opt for the standard deduction, which may limit the impact of this change on their tax returns.

However, serious players — those who consistently track monthly results, maintain comprehensive logs, or approach gaming as a side business — must understand how the new limit influences their itemization strategies and overall tax liabilities.

Does This Apply to Online Gaming Too? Yes

Federal tax law does not differentiate between offline and online gaming activities. This comprehensive approach means that the following are all treated equivalently for federal tax purposes:

• Winnings from physical casinos
• Winnings from sportsbooks
• Winnings from poker rooms
• Winnings from online poker
• Winnings from online casinos

 It is imperative for players to report gross winnings as income. Losses remain deductible only if the player itemizes and only to the extent of either total losses or the newly established 90% cap on winnings under the revised law.

This regulation underscores the importance of accurate record keeping, particularly for participants in the digital space where obtaining accurate data can often be streamlined if records are stored correctly.

Record Keeping: Your Most Important Tool

With the modification in tax legislation, meticulous record-keeping will become an indispensable tool for gamblers. Players are encouraged to track the following key data points:

• Dates of gambling activities
• Amounts wagered
• Amounts won
• Amounts lost
• Statements or transaction logs from online casinos or sportsbooks

Effective bookkeeping serves not only to maximize deductions but also as a robust defense in the event of inquiries or audits by the Internal Revenue Service (IRS).

Practical Impacts on Players

The implications of this tax change will prompt a reassessment of how gamblers approach risk and reward. For example:

• Professional players who previously relied on loss carry-overs or detailed profit/loss models may face increased tax liabilities due to the new regulations.
• Casual players with brief gaming sessions may discover they owe taxes on results that would once be considered break-even.
• Players who have previously calculated their effective gambling income may now need to reevaluate their projections to align with the new tax landscape.

Moreover, this change reflects a broader trend: tax authorities increasingly scrutinizing digital income sources, including those derived from gaming activities.

Choosing the Right Platform Matters — Especially Online

As the implementation of new tax rules approaches, selecting a reliable gambling platform becomes paramount. Players should ensure the platform they choose:

• Is transparent regarding the reporting of taxable activities
• Provides straightforward access to win/loss data
• Offers effective customer support for record inquiries
• Operates under recognized licenses and maintains a strong reputation

For individuals engaged in real-money online gaming environments, considering reputable platforms such as the type listed above will help players stay in tax-reporting compliance.

Sources

CNBC – “Federal Tax Changes and Impact on Gambling Income”

IRS – U.S. Tax Code / Internal Revenue Service official guidance (Home | Internal Revenue Service )

U.S. Government Publishing Office – 2025 Tax Legislation texts

Reuters – “U.S. Tax Changes Affecting Gambling Winnings”

Associated Press – “New Tax Rules for Gamblers”