🎯 Tax Update: Gambling Loss Deductions Are Changing Under the One Big Beautiful Bill (Effective 2026)
- shaybachelder
- Aug 1
- 2 min read
A little‑noticed provision buried in the recent sweeping tax and spending package—commonly called the One Big Beautiful Bill—signed by President Trump on July 4, 2025, dramatically alters how gambling losses can be deducted for federal income tax purposes .
🔹 Current Rule (through 2025):
Itemizing taxpayers can deduct 100% of gambling losses, up to the amount of their winnings—meaning someone who wins and loses the same amount has no taxable “phantom income” .
🔹 New Rule (effective Jan 1, 2026):
Only 90% of gambling losses may be deducted—even if losses equal winnings. A break-even gambler could now owe tax on up to 10% of their losses .
⚠️ Why It Matters:
– A gambler who wins $100,000 and loses $100,000 could now owe tax on $10,000—even with no net gain .
– The provision is expected to raise approximately $1.1 billion over eight to ten years and has sparked widespread concern among professional and high-volume gamblers who may see the change as financially untenable .
📜 Legislative Pushback:
Bipartisan lawmakers—including Rep. Dina Titus (D‑NV) and Sen. Catherine Cortez Masto (D‑NV)—have introduced the FAIR BET Act (H.R. 4304) to fully restore the 100% gambling loss deduction . However, efforts to reverse the cap have been blocked in the Senate—Sen. Todd Young objected to unanimous consent, halting the measure for now .
✅ What Clients Should Do Now:
– Meticulously track all gambling winnings and losses for itemized deduction claims.
– Understand that the 90% cap applies to tax year 2026 onward.
– High-frequency or professional gamblers should evaluate alternative strategies, as this change could create tax liabilities even in break-even scenarios.
– Monitor proposed changes in Congress—the cap may yet be repealed or modified.
💼 Need help reviewing client records or exploring tax planning alternatives under this new rule? We’re here to help you stay compliant and maximize strategies. Book an advisory session here:
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