US Gambling Tax Deduction Slashed to 90% in New Federal Law
The so-called “Big Beautiful Bill” just dropped a not-so-beautiful surprise on gamblers: only 90% of gambling losses will be tax deductible starting in 2026.
That means even if you break even, you’ll still owe taxes on 10% of your total winnings.
The reforms were buried deep in a 900-page package, and despite several challenges, have now been passed into law.
Senate Democrats Tried to Stop It
Senator Catherine Cortez Masto (D-NV) led a last-minute push to scrap the rule, requesting unanimous consent to restore the full deduction. But Senate Republicans blocked the move, and the damage is done. The new rule is now locked in. After the vote, lawmakers from both parties admitted they didn’t realize the provision was in the bill at all.
What It Means for Gamblers
Here’s the simple math:
- Old Rule: Win $100,000, lose $100,000 → $0 taxable income
- New Rule (2026): Win $100,000, lose $100,000 → taxed on $10,000
That’s not a typo. You net zero, and still pay.
For professional gamblers and high-stakes players, this is a major blow. The 10% gap could be the difference between staying in the game or going bust. In an industry where margins are razor thin, this tax shift hits hard.
Backlash Builds, No Fix Yet
The IRS expects to raise over $1 billion from this change in the next decade. Meanwhile, bills to repeal the 90% limit have already been introduced in both chambers of Congress. None have made it past first base.
Industry insiders fear this is just the beginning of a broader crackdown on gambling deductions. And unless the momentum shifts soon, 2026 will usher in a tax code that punishes neutral and low-margin play.
Vegas Already Hurting
Las Vegas is already reporting fewer gamblers on the strip and a steady decline in revenues. Measures like this are not going to help the traditional gambling capitals make any kind of recovery. Major tax hikes like this will inevitably mean more problems for the casinos as gamblers stay away due to an increasingly hostile environment.
