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
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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.
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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?
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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?
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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.
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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?
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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.
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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.