Gambling losses deducted at 90% instead of 100% in new tax bill

Gamble Smart guy says tucked away in the tax bill formerly known as the Big Beautiful Bill is a provision to change the amount of losses you can deduct against your winnings. The number goes from 100% down to 90%. I don't do that kind of math that the high rollers here do for their 10% comp rebates on losses but why would that matter? Win a million, lose a million, owe taxes on a hundred thousand? I just get the feeling it will just drive IRS reporting underground and slot action will dry up fast. It could put all the casinos out of business in 2 fiscal years.
https://www.youtube.com/shorts/-Jq4nWw1gfg

If a gambler has $101,000 of taxable winnings and $100,000 of losses plus expenses during a year, their net winnings would be only $1,000. However, with only $90,000 of losses and expenses able to be deducted, their taxes would be based on winnings of $11,000. If taxed at 24% — the federal withholding rate for gambling taxes — that would lead to a tax bill of $2,640, or well over double the net winnings figure.

Professional gambler and Unabated co-founder Captain Jack Andrews was among those critical of the proposal.
In a post on social media site X, he wrote: “The big beautiful bill proposes that gambling losses be capped at 90% of winnings — even for professionals.
“If you file the way the IRS intends, you declare gross winnings and deduct losses. This means even losing gamblers would owe money on their gambling.
“Combine this with the deep cuts in state funding and states will be looking to find revenue from increased gaming operator taxes (which squeeze the consumer).
“I say this sincerely: This will implode the entire gaming industry.”

The proposal comes as a number of states also try to hike gambling taxes. Illinois last month introduced a new per-wager fee — set at 25 cents per wager for an operator’s first 20 million wagers accepted, and 50 cents per wager for every bet taken thereafter — while New Jersey upped its tax rate from 13% to 19.75% and Louisiana raised its from 15% to 21.5%.

Those tax hikes are paid by operators, but in Illinois, FanDuel, DraftKings, and Fanatics are all set to introduce surcharges to pass the cost of the new fee directly on to customers.
https://www.ingame.com/federal-bill-gambling-losses-cap/
There's a link to download the 940 page BBB on the page of the link above.

On pages 263-264
SEC. 70114. EXTENSION AND MODIFICATION OF LIMITATION ON WAGERING LOSSES.
(a) IN GENERAL.—Section 165 is amended by striking subsection (d) and inserting the following:
‘‘(d) WAGERING LOSSES.—
‘‘(1) IN GENERAL.—For purposes of losses from wagering transactions, the amount allowed as a deduction for any taxable year—
‘‘(A) shall be equal to 90 percent of the amount of such losses during such taxable year, and
‘‘(B) shall be allowed only to the extent of the gains from such transactions during such taxable year.
‘‘(2) SPECIAL RULE.—For purposes of paragraph (1), the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2025.

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I don't know if I'm reading this wrong, but did this just say if I lose $1.111 million in session play, I can deduct $1 million in losses from $1 million in session wins so I don't owe any tax? But in the above example, win a million, lose a million, still get taxed on $100K.

yup.

here's a pro poker's player's post about it:
https://www.instagram.com/reel/DLljWfovXxK/

Win $500k in a poker but break even for the year, still pay $50k taxes.
But how is (non) reporting of profits by everyone any different than what it is now?

the attitude in the US is, if you are a gambler, everybody wants a piece of you .... doesn't matter if you're the biggest loser of all time, they want a piece of that too, tax people same as the greediest casino

Another link to the bill text, from the Congress website - search for the word "wagering" to find the text in question.

Note that the 90% restriction was not in the version that passed the House, so there is a chance it will be removed from the final bill.

Quote: odiousgambit

the attitude in the US is, if you are a gambler, everybody wants a piece of you .... doesn't matter if you're the biggest loser of all time, they want a piece of that too, tax people same as the greediest casino
link to original post

Casinos in Maryland are taxed at 62.5%.

Quote: ThatDonGuy

Another link to the bill text, from the Congress website - search for the word "wagering" to find the text in question.

Note that the 90% restriction was not in the version that passed the House, so there is a chance it will be removed from the final bill.
link to original post

According to the reconciliation process for this bill, the House now votes Approve/Don't Approve on the Senate's version of the bill. I don't believe there is any room for the House making further amendments.

They can but it would ping pong back to the Senate. One House member has mentioned the gambling tax in a rant about how only one hour is being given to review the legislation and changes were made that affect 13 different committees.

Quote: 100xOdds

yup.

here's a pro poker's player's post about it:
https://www.instagram.com/reel/DLljWfovXxK/

Win $500k in a poker but break even for the year, still pay $50k taxes.
But how is (non) reporting of profits by everyone any different than what it is now?
link to original post

You wouldn't pay $50,000 in taxes. You would pay taxes on $50,000 income.

Would that $50,000 in "income" put you in a higher bracket on all your income?

That is really backwards if you think through possible scenarios.

Let's take a $100,000 must hit.

Lose $90,000 and hit for a ten grand profit. But can only deduct 90% of losses so deduct $81,000 of losses. You only made a $10,000 profit but owe taxes on $19,000.

But IF you get really lucky and win after only losing $1,000 then you made a $99,000 profit but can only claim $900 in losses so you owe tax on only $99,100.

The more successful you are (winning without losses) the less tax you have to pay.

If you were single last year and your other income was $120K, you'd be in the 24% tax bracket, so adding $50K onto it would be a 24% tax of $12K.
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Some legislator just stuck their finger in the pie like it was a tariff without thinking. This is bad legislation.

Quote: ChumpChange

If you were single last year and your other income was $120K, you'd be in the 24% tax bracket, so adding $50K onto it would be a 24% tax of $12K.
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Some legislator just stuck their finger in the pie like it was a tariff without thinking. This is bad legislation.
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My head hurts doing your math.

Quote: billryan

Would that $50,000 in "income" put you in a higher bracket on all your income?
link to original post

No, as income tax "brackets" only apply to specific amounts of income.
For example, under the 2024 tax code, for single people, the 22% bracket runs from $47,150 to $100,525, and the 24% bracket runs from $100,525 to $191,950.
If your income is $105,000, you don't pay 24% on the whole $105,000; you pay 24% on $4,475 (i.e. the amount that exceeds $100,525), and 22% or less on the rest.
I got into quite a few "discussions" with people back in the days of the original Reagan/Bush tax cuts over how this worked.

Note that losses can still be deducted up to the full amount of winnings. If you lose $50,000 but then win $45,000, you can deduct $45,000 from the winnings, as opposed to being capped at 90% of the winnings.

Quote: ChumpChange

If you were single last year and your other income was $120K, you'd be in the 24% tax bracket, so adding $50K onto it would be a 24% tax of $12K.
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Some legislator just stuck their finger in the pie like it was a tariff without thinking. This is bad legislation.
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How dare you disparage the outstanding big bill.

I don't get C-Span anymore so I don't get to hear all of it being read for hours on end and all the both sides-ism that precedes and follows. I just get the snippets in my social media silo that are 100% against this bill. Tell me again, on a 50-50 vote, which side are you on?

BREAKING: Congressman Thomas Massie says he has enough votes to block President Trump's 'One Big Beautiful Bill' in the House, per POLITICO

(Probably in hopes of making the bill ever worse.)

Sen. Schumer had the name of the bill (BBB) struck from the name of the bill, so HR 1 will do for now.

Quote: ChumpChange

I don't get C-Span anymore so I don't get to hear all of it being read for hours on end and all the both sides-ism that precedes and follows. I just get the snippets in my social media silo that are 100% against this bill. Tell me again, on a 50-50 vote, which side are you on?

BREAKING: Congressman Thomas Massie says he has enough votes to block President Trump's 'One Big Beautiful Bill' in the House, per POLITICO

(Probably in hopes of making the bill ever worse.)
Sen. Schumer had the name of the bill (BBB) struck from the name of the bill, so HR 1 will do for now.
link to original post

I'm not on anyone's side, as no one is always on my side.
This bill will raise my taxes, eliminate a portion of our nation's safety net, and give tax cuts to the rich. What's not to love.

Sgt. Schultz could expect to get his feet wet at Alligator Alcatraz.

Reminder that that the 90% deduction rule is allowed for discussion, since it is gambling related. Other political speech is not.

Quote: ThatDonGuy

Quote: billryan

Would that $50,000 in "income" put you in a higher bracket on all your income?
link to original post

No, as income tax "brackets" only apply to specific amounts of income.
For example, under the 2024 tax code, for single people, the 22% bracket runs from $47,150 to $100,525, and the 24% bracket runs from $100,525 to $191,950.
If your income is $105,000, you don't pay 24% on the whole $105,000; you pay 24% on $4,475 (i.e. the amount that exceeds $100,525), and 22% or less on the rest.
I got into quite a few "discussions" with people back in the days of the original Reagan/Bush tax cuts over how this worked.

Note that losses can still be deducted up to the full amount of winnings. If you lose $50,000 but then win $45,000, you can deduct $45,000 from the winnings, as opposed to being capped at 90% of the winnings.
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Thank you for a post with actual information in it. As I recall there is no limit to the losses you can declare, but the losses you can deduct were limited to 100% of your wins.

As I understand your last sentence, only 90% of your declared losses can be deducted, up to 100% of your winnings. So if I have a win for $50000 I can declare a loss of $55555.56 and deduct $50000.

That would make it easy. $50000, or $55555.56.... who's counting?

I don't know if tipping counts as losses on player's ledgers of sessions.

Quote: ChumpChange

I don't know if tipping counts as losses on player's ledgers of sessions.
link to original post

I doubt that tips are deductible at more than 0%.

Quote: AutomaticMonkey

As I understand your last sentence, only 90% of your declared losses can be deducted, up to 100% of your winnings. So if I have a win for $50000 I can declare a loss of $55555.56 and deduct $50000.

That would make it easy. $50000, or $55555.56.... who's counting?
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Exactly. Of course, you have to declare the $50,000 in winnings as well.

$300K Session wins minus $100K session losses ($90K eligible losses) = $210K Taxable wins, $200K Actual wins
$200K Session wins minus $100K session losses ($90K eligible losses) = $110K Taxable wins, $100K Actual wins
$110K Session wins minus $100K session losses ($90K eligible losses) = $20K Taxable wins, $10K Actual wins
$105K Session wins minus $100K session losses ($90K eligible losses) = $15K Taxable wins, $5K Actual wins
$100K Session wins minus $100K session losses ($90K eligible losses) = $10K Taxable wins, $0 Actual wins
$95K Session wins minus $100K session losses ($90K eligible losses) = $5K Taxable wins, $5K Actual loss
$90K Session wins minus $100K session losses ($90K eligible losses) = $0 Taxable wins, $10K Actual loss
$50K Session wins minus $100K session losses ($50K eligible losses) = $0 Taxable wins, $50K Actual loss

I don’t think it’s as bad for professional gamblers as people think because the bill also includes the extension of the qualified business income deduction for small businesses, which applies to schedule C professional gamblers. Without the bill, this would otherwise expire after 2025. It gives a 20% deduction on your net gambling income.

Let’s take an example of someone with 150k net income, and say they had 300k gross wins and 150k in losses.

Under the BBB they only deduct 135k of the losses so taxable income is 165k instead of 150k. But then you take off 20% of the 165k which leaves 132k taxable income.

If the BBB doesn’t pass they have 150k taxable income because neither provision applies.

The break even point in this example would be someone with 450k in gross income and 150k net. Then the taxable income is 150k without both provisions or with both.

For the bill to be worse for someone they would have to have gross income greater than 450k for the 150k net.

@randomperson

Delete your post please. It's not conducive towards the cause of getting the 90% BBB bill rider removed.

Big One Ugly Bill unchanged upon passing. Keep figuring out how to beat the new 10% taxman vig.

Quote: ChumpChange

Big One Ugly Bill unchanged upon passing. Keep figuring out how to beat the new 10% taxman vig.
link to original post

Ah, I see you must have read the new law and understand it.

Then please, share with us, what exactly are the provisions in the final version relating to the tax deductibility of gambling losses?

I'll refer to my original post of the Senate version. There's a link to download the 940 page bill on one of the external pages. I quoted what mattered and what I was alerted to. If there's civil disorder everywhere in the country at some point, that's another story. Maybe bump up that minimum wage up to $45/hour and see if that helps.

Least they could have done was raise the W2G threshold but no. Where were the casino lobbyist on this bill? It’s like they have no clue what affects their customer. Unfortunately no one really thinks about taxes during the year. They just deal with it later. Then amateurs look at their wins and losses and w2g’s and realize they’re screwed. Gambling has turned from an industry governments can tax to a money grab. It’s like the lottery, they win when you lose, they win when you win.

Quote: ChumpChange

I'll refer to my original post of the Senate version. There's a link to download the 940 page bill on one of the external pages. I quoted what mattered and what I was alerted to. If there's civil disorder everywhere in the country at some point, that's another story. Maybe bump up that minimum wage up to $45/hour and see if that helps.
link to original post

Civil disorder? Over only being able to deduct 90% of wagering losses? I know APs can be a little eccentric, but I don't think we're going to go around burning and looting and ra... rappelling off buildings in protest of a slightly disadvantageous change in tax policy.

That has to be what you mean, because that's the only aspect of the new law we're supposed to be discussing here, right?

I could watch the beginning of Bird Box again.

Quote: AutomaticMonkey

Quote: ChumpChange

Big One Ugly Bill unchanged upon passing. Keep figuring out how to beat the new 10% taxman vig.
link to original post

Ah, I see you must have read the new law and understand it.

Then please, share with us, what exactly are the provisions in the final version relating to the tax deductibility of gambling losses?
link to original post

Allow me.
You can deduct losses for the year up to the smaller of (a) your declared wins for the year, and (b) 90% of your declared losses for the year.

Link to the version of the bill that was passed by both the House and Senate (it takes a few days for the "official final bill" to make it online). Scroll down to Section 70114.

Quote: ThatDonGuy

Quote: AutomaticMonkey

Quote: ChumpChange

Big One Ugly Bill unchanged upon passing. Keep figuring out how to beat the new 10% taxman vig.
link to original post

Ah, I see you must have read the new law and understand it.

Then please, share with us, what exactly are the provisions in the final version relating to the tax deductibility of gambling losses?
link to original post

Allow me.
You can deduct losses for the year up to the smaller of (a) your declared wins for the year, and (b) 90% of your declared losses for the year.

Link to the version of the bill that was passed by both the House and Senate (it takes a few days for the "official final bill" to make it online). Scroll down to Section 70114.
link to original post

Wondering if this might be a Dana White to the rescue issue before year end.

Ironically if you can only deduct 90% of losses, then more gamblers will be net winners in the eyes of the tax man. If they can pull it off three out of five years, and otherwise in their operation like a business with proper record keeping and an attempt to maximize profit, then they will have presumptively pass the hobby or a business test. Thus they can use Schedule C to deduct losses instead of Schedule A and take advantage of the increased standard deduction.

IRC 183(d) states:
(d) Presumption
If the gross income derived from an activity for 3 or more of the taxable years in the period of 5 consecutive taxable years which ends with the taxable year exceeds the deductions attributable to such activity (determined without regard to whether or not such activity is engaged in for profit), then, unless the Secretary establishes to the contrary, such activity shall be presumed for purposes of this chapter for such taxable year to be an activity engaged in for profit. In the case of an activity which consists in major part of the breeding, training, showing, or racing of horses, the preceding sentence shall be applied by substituting “2” for “3” and “7” for “5”.

—-
The deductions attributable to gambling losses are reduced by 10%, therefore take a sports bettor who only wagers on -110 odds and has $22000 of bets, split equally between winners and losers. Under present law, he has zero gain, under the new law, he has $10,000 in winning bets minus $11,000 in losses reduced by 10% or $9,900 in losses he can deduct. But he is now $100 profitable. See the example on page 18 of this publication: https://www.irs.gov/pub/irs-pdf/p5558.pdf

Thus, by virtue of showing a profit, the gambler can take advantage of Schedule C rules provided they can satisfy other factors of the nine factor hobby or business test such as record keeping and knowledge. And I have never seen a Tax Court case challenge professional gamblers for showing small gains, usually those are recreational gamblers who try to deduct heavy losses on Schedule C and claim they are professional by virtue of the amount spent on gambling.

Quote: ChumpChange

I don't know if tipping counts as losses on player's ledgers of sessions.
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I believe tips are only deductible when filing as a professional.

When you're tossing the dealer tokes while playing, and those chips don't show up in your color up, aren't they already a loss?

Quote: ChumpChange

When you're tossing the dealer tokes while playing, and those chips don't show up in your color up, aren't they already a loss?
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I would agree most people would look at it that way. In theory you are supposed to count every wager won and lost, not just what you end up with. Think of it the way a slot system tracks it, every press of the button is a bet of $x and every payback is a win of $x, That is why when casinos give you end of year statements they will say something like $224,786 coin in and $217,436 coin out. Your bet was $224k and your win was $217k.

This sucks 100 percent for the average gambler. Most have no idea how gambling income is taxed anyway so ignorance is bliss. The way the law is being explained here implies that everyone who gets a handpay is technically a winner. 10 percent of that jackpot is taxable income regardless if you gave it all back. So if you won $1500 and lost 2k you’d owe taxes on $150 of income.

However for the professional not so much. Either way you can expect the pro’s ordinary deductions to increase by 10 percent. Whether that’s by extra car maintenance or whatever other miscellaneous stuff they come up with lol.

I don't know, having coin-in coin-out numbers on a tax form seems ridiculous and tax bracket wrecking. One Win/Loss statement I have gives a monthly tally of what I've won or lost then a year end total. Like January, lost $150; February, won $200; end of year, won $50. There's no detail, and I have no idea if it's accurate unless I'm keeping track myself. With a gambling diary I'd have to tally up my wins from each winning day and my losses from each losing day and find the difference.

Quote: ChumpChange

With a gambling diary I'd have to tally up my wins from each winning day and my losses from each losing day and find the difference.

The IRS will accept extemporaneous gambling logs and should be kept if you plan on claiming any wins or losses. One year I had over $500k in W2's to claim and fortunately I had gambling logs saved. They weren't detailed but did have every day that I gambled and what I won and lost and at which casino. I did not do any break down by game or time of day. I did mine by email every time I gambled so I had valid proof that they weren't just created all at once.

I'd make a new Excel workbook and update it after each trip then e-mail it to myself. Same worksheet, just extra entries for each e-mail.

If you have winnings of $100,000 and losses of $80,000, you currently owe taxes on $20,000. If I understand it, under the new law, you'd owe taxes on $28,000.

Quote: DRich

Quote: ChumpChange

With a gambling diary I'd have to tally up my wins from each winning day and my losses from each losing day and find the difference.

The IRS will accept extemporaneous gambling logs and should be kept if you plan on claiming any wins or losses. One year I had over $500k in W2's to claim and fortunately I had gambling logs saved. They weren't detailed but did have every day that I gambled and what I won and lost and at which casino. I did not do any break down by game or time of day. I did mine by email every time I gambled so I had valid proof that they weren't just created all at once.
link to original post

Can't you just do a 1040x for the year the irs is auditing you with re-constituting you win/loss based just on your bank statements?
ie: $ deposited, $ withdrawn

Quote: 100xOdds

Quote: DRich

Quote: ChumpChange

With a gambling diary I'd have to tally up my wins from each winning day and my losses from each losing day and find the difference.

The IRS will accept extemporaneous gambling logs and should be kept if you plan on claiming any wins or losses. One year I had over $500k in W2's to claim and fortunately I had gambling logs saved. They weren't detailed but did have every day that I gambled and what I won and lost and at which casino. I did not do any break down by game or time of day. I did mine by email every time I gambled so I had valid proof that they weren't just created all at once.
link to original post

Can't you just do a 1040x for the year the irs is auditing you with re-constituting you win/loss based just on your bank statements?
ie: $ deposited, $ withdrawn
link to original post

I don't think so because they wouldn't know that the withdrawals went to your gambling and the deposits came from gambling. They would want further backup. That is why they ask for an extemporaneous dated log. I used email for my log to preserve the dates.

Poker Is Under Attack In America - 153,696 views Jul 2, 2025
Doug Polk Poker
435K subscribers



Comment says: The amendment was sponsored by Lindsey Graham and introduced by John Thune.

Comment: This is even worse for online gamblers where they track every single bet that won and count it as "winnings" someone could buy in for 1000 and cash out for 1000 but be on the hook for 100k in winnings and only be able to deduct 90k.

Comment: This kills professional sports bettors. Imagine if you won $10 million and lost $9.5 million for net profit of $500k. With this new bill, you have to pay $495k in taxes and you will make no money even if you win $500k in profits. Its crazy.
in this scenario instead of paying 30% on 500k, you’re paying 30% on 1.445m despite having only made 500k for the year because you can only write off 8.55m of your losses.

So instead of making $500,000 and paying $150,000 in taxes, you make $500,000 and pay $435,000 in taxes because your income is calculated as $1,445,000, even though you only earned $500,000.

Meaning you make $65,000 for the year instead of $350,000.

Comment: We have state taxes in Wisconsin. We can NOT write off any losses. ZERO! Win $1,000,000 and lose $1,000,000 in Wisconsin you pay STATE taxes on the $1,000,000. It's beyond brutal.

Comment: This will decimate gambling completely.. Las Vegas is going to be hurting really bad
************************************************************************
I'm gonna say if my wins are running at about 0.5% to 2% above losses, this 10% loss reduction will eat that up, especially if my tax rate is above 0%.

Quote: billryan

If you have winnings of $100,000 and losses of $80,000, you currently owe taxes on $20,000. If I understand it, under the new law, you'd owe taxes on $28,000.
link to original post

Right, but if you have wins of $100000 and can show losses of $111111, you owe taxes on $0.

What, is everybody looking to make Eagle Scout around here? Gaming is a dirty business. Like being a drug dealer, except there's no drugs and chicks don't dig us so much. You do what you have to do.

Does this new deduction limit only apply to individual taxpayers, or both individuals and institutions (like casinos and bookmakers)?

How much ratholing can you do in a poker tournament? I'm gonna say absolutely none. Poker players going to get 6 month vacations in other countries to play poker now?

Gambling is being treated worse than drug dealing, since drug dealers can fully deduct the cost of goods sold and gamblers can't. https://masonlawpc.com/tax-advice-for-drug-dealers/

As far as this law, cross my fingers I should show a net profit in 2025 after two $5 denomination royal flushes. I am thinking as filing as a professional this year, to give me year one of the three in five year test that my gambling is a business and not a hobby. I would pay the self employment tax of 14.13% above income tax, but I wouldn't have to pay a phantom 3.8% Obamacare tax on my losses (because that tax is imposed on adjusted gross income over $200k which my gambling session wins push me over).

If this law is in effect in 2026, even in a bad year, playing video poker I don't expect to lose 111.11% of my stake, as in past years I tended to lose no more than triple the theoretical EV on the games I play (so 3-6% of coin in). In previous profitable years I had thought about filing professional but the SE tax paid outweighs the less income tax I would pay from a lower adjusted gross income, as well as added audit risk with adding a Schedule C in the mix. So I will be joining the ranks of professional gamblers as will many other folks who only gamble at games with less than a 11% house edge, an unintended consequence of the law.

Professional status: If you gamble as a profession, you may be able to deduct gambling-related expenses (like travel and lodging) on Schedule C, "Profit or Loss From Business."