Can You Write Off Gambling Losses on Your Taxes?

October, 27 2025 by Veselina Arangelova, EA

If Lady Luck was ever on your side, you know gambling winnings are taxable income, and under certain conditions, losses can be used to reduce that income come tax time. The rules for deducting gambling losses have changed over time, but generally, up until now, when you report losses, they are 100% used to offset winnings. From 2018 to 2025, the Tax Cuts and Jobs Act (TCJA) even expanded what counted as a gambling loss. Now, starting in 2026, the new Big Beautiful Bill Act of 2025 limits how much of those losses you can deduct. This blog explains what the rules were, what they are now, and how they may affect taxpayers.
 

What the Rule Was Before the Legislation Passed 
 

Prior to the passing of the One Big Beautiful Bill Act, the key rule was that you could deduct gambling losses up to the amount of your winnings. So, if you won $100,000 and lost $100,000, you could deduct the full $100,000 and report no taxable income from gambling. This rule helped people who broke even avoid paying taxes on gambling income.

However, this rule also made it important for taxpayers to keep good records. The IRS often reviews gambling deductions closely, especially when large amounts are involved. If you didn’t have proof of your losses—like receipts, tickets, or logs—the IRS could deny the deduction, even if your losses were real.
 

What the Rule Is Now

Starting January 1, 2026, the One Big Beautiful Bill Act changes the rules. Now, taxpayers can only deduct gambling losses up to 90% of their winnings. This means that even if you break even, you’ll still have to report some of the gambling income. 

This rule applies to all types of gambling, including casinos, sports betting, horse racing, and lotteries.

Let’s say Alex wins $50,000 from slot machines in 2026. Over the same year, he loses $50,000 playing poker. Under the old rule, Alex could deduct the full $50,000 and report no income. But under the new rule, he can only deduct $45,000 (90% of his winnings). That means he must report $5,000 in taxable income—even though he didn’t make any money overall.
 

How It May Impact Taxpayers

This change affects anyone who gambles, especially those who do it often or with large amounts of money. Even if you break even, you’ll still owe taxes on part of your winnings. That could mean a surprise tax bill for people who thought they wouldn’t owe anything. 

Professional gamblers may also see higher taxable income, even if their overall gambling activity didn’t result in a profit. This could affect how they plan their finances and report their income.
 

Keeping Good Records

To claim gambling losses, you must itemize deductions on Schedule A of your tax return. You also need to keep detailed records of your gambling activity. This includes: 
 

• Receipts and tickets from casinos or betting sites 
• A log of your gambling sessions, including dates, places, types of games, amounts won and lost 
• Bank or credit card statements showing gambling-related transactions 

Without these records, the IRS may not allow your deduction. If you’re audited and can’t prove your losses, you could end up paying taxes on all your winnings.