The ink is barely dry on President Donald Trump’s sweeping new tax legislation. However a debate is already underway over a playing provision that might reshape how thousands and thousands of U.S. gamblers are taxed on their bets.
That’s as a result of the so-called One Huge Lovely Invoice (OBBB), signed into legislation on July 4, 2025, introduces a cap on deductions for playing lossses.
Beginning January 1, 2026, gamblers will have the ability to deduct solely 90% of their playing losses towards their winnings on federal taxes. (That’s a shift from the earlier coverage that allowed a full 100% deduction of playing losses towards winnings.)
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The Joint Committee on Taxation (JCT) has projected that the measure will elevate roughly $1.1 billion over ten years.
Already, some lawmakers are sad and pushing to repeal the supply. Curious? Right here’s extra of what you have to know.
Trump playing losses tax deduction: What’s altering?
President Trump’s new tax invoice was enacted on Independence Day (July 4, 2025). The mega laws, which preserves lots of Trump’s tax cuts from 2017 (the TCJA), introduces a brand new restrict on a well-liked deduction for playing losses.
- If Congress would not repeal the supply, starting in 2026, taxpayers will solely have the ability to deduct 90% of their playing losses towards their winnings on their federal revenue tax returns.
- Underneath the normal system (nonetheless in place for the 2025 tax 12 months, with returns sometimes filed in early 2026), an itemizing taxpayer who wins and loses the identical quantity in a 12 months, with correct documentation, can typically deduct 100% of their losses.
So, for instance, if somebody playing wins $210,000 and loses $210,000 in a 12 months, they might deduct the complete $210,000 in losses. Underneath the brand new legislation, starting in 2026, solely $189,000 of that quantity can be deductible. That will lead to a taxable revenue of $21,000, though the gambler broke even.
Observe: As written, the OBBB deduction change would doubtless apply to each informal {and professional} gamblers.
‘Phantom revenue’ issues in new Trump tax invoice?
Traditionally, the IRS has required all playing winnings to be reported as taxable revenue, no matter whether or not they’re from casinos, sports activities betting, lotteries, or fantasy sports activities.
Taxpayers who itemized deductions might totally offset winnings with losses, however solely as much as the quantity of their winnings. So, taxes had been paid solely on internet income.
The brand new 90% cap, some argue, would disrupt that. In response to some opponents of the measure, the brand new restrict might lead to gamblers paying taxes on revenue they didn’t obtain.
A key criticism is that if a taxpayer received and misplaced $100,000 in a 12 months, for instance, the brand new rule would imply that the bettor can be taxed on $10,000 of what some take into account to be “phantom revenue,” since they successfully broke even.
What’s Phantom Earnings? Phantom revenue refers to cash that’s taxable to a person or entity within the eyes of the IRS, though that individual or entity hasn’t truly obtained the money.
In different phrases, it is the notion that you could be owe taxes on revenue that solely exists “on paper,” not in your checking account.
Enter the FAIR BET Act.
In response to the outcry, Rep. Dina Titus (D-Nev.), together with Rep. Ro Khanna (D-Calif.), launched the Honest Accounting for Earnings Realized from Betting Earnings Taxation (FAIR BET) Act simply days after the OBBB was signed.
The invoice proposes to revive the earlier commonplace, permitting taxpayers to deduct 100% of their playing losses. Supporters of the FAIR BET Act argue that the brand new cap unfairly penalizes leisure {and professional} gamblers.
In an official launch, Titus states that the FAIR BET Act would “deliver equity again to gaming taxation, ensuring that gamblers can totally deduct losses after they report their winnings.”
It is value noting that after the OBBB was signed into legislation with the 90% limitation, Democratic Sen. Catherine Cortez Masto of Nevada launched a invoice referred to as the Full Home Act (“Facilitating Unbiased Loss Limitations to Assist Our Distinctive Service Financial system”) to revive the power of gamblers to deduct 100% of their losses.
However on July 10, 2025, Senate Republicans blocked the repeal try when Sen. Todd Younger (R-Ind.) objected to the unanimous consent request. So for now, the repeal effort is stalled.
In response, Cortez Masto stated in a launch: “It is a Republican piece of laws that’s truly inflicting folks to pay taxes on cash they misplaced. It is senseless.”
In relation to trade response, in line with CNN reporting, the American Gaming Affiliation (AGA) initially supported Trump’s tax megabill, however has reportedly voiced assist for restoring the complete playing loss deduction.
Reporting playing losses on taxes
(Picture credit score: Getty Photographs)
In any case, all playing winnings have to be included in your tax return, whatever the quantity or whether or not you obtain official documentation from the on line casino or organizer.
- Losses from playing could also be deducted, however provided that you itemize your deductions on Schedule A of Kind 1040.
- Playing losses are deductible solely as much as the whole quantity of playing winnings reported, which means you can not deduct greater than you received. (As talked about, beneath the OBBB, the proportion that may be written off is ready to vary to 90% in 2026.)
To assert the deductions, you shoul hold thorough and particular data of all wagers, together with receipts, statements, tickets, or a private log that paperwork every session’s particulars: date, place, kind of playing, and quantities received or misplaced.
Backside line: What’s at stake with the Trump playing tax change
The controversy over the playing loss deduction cap highlights broader questions on how the tax code ought to deal with playing exercise.
Some potential Implications:
Tax Legal responsibility Regardless of Breaking Even: Gamblers might owe federal revenue tax even when their precise winnings and losses cancel one another out.
Elevated Prices for Excessive-Quantity Bettors: The bigger the amount of playing exercise, the larger the influence of the non-deductible 10% on taxable so-called “phantom revenue.”
Proponents of the FAIR BET Act argue that taxing solely internet winnings is a matter of equity. On the similar time, critics of the earlier system view the cap as a method to extend tax income and discourage extreme playing.
With the brand new deduction cap scheduled to take impact in 2026, the end result of this legislative battle may have implications for thousands and thousands of U.S. bettors. Keep tuned.
