09/28/2026
GAMBLERS: A major tax rule changed for 2026.
And this one can hurt even when you didn't actually make money gambling.
Starting in 2026, the federal deduction for gambling losses is limited to the lesser of:
➡️ 90% of your gambling losses, or
➡️ your gambling winnings.
Here's a simple example:
Gambling winnings: $20,000
Gambling losses: $20,000
You might think:
“I broke even. I didn't make anything.”
But for 2026, only 90% of the $20,000 loss = $18,000 may be deductible.
That means you could potentially have $2,000 left exposed to federal income tax even though you broke even economically.
And there's another important rule:
Gambling winnings and losses are not simply netted together on the tax return for a casual gambler.
Your gambling winnings are reported as income, while qualifying gambling losses are claimed separately as an itemized deduction on Schedule A. If you don't itemize, you generally don't get the gambling-loss deduction.
Also, no W-2G doesn't mean no taxable income. The IRS says gambling winnings must be reported even when they aren't reported to you on Form W-2G.
The IRS recommends keeping an accurate diary or similar record of winnings and losses, along with supporting documents such as tickets, statements and receipts.
You can lose money gambling and still have a tax consequence.
And for retirees, there can be another surprise beyond the tax bill…
➡️ Our next post: How gambling can affect Social Security taxation and Medicare premiums!!!!
