Can I deduct gambling losses?

Can I deduct gambling losses? The short answer

Yes, you can deduct gambling losses, but the deduction works as a ceiling, not a refund. Gambling winnings are taxable federal income, and losses from wagering can only reduce the gambling winnings you report for the same year. If you lost more than you won, the extra loss simply disappears for tax purposes: it can't cut your wages or other income.

Two more limits matter. First, from the 2026 tax year the One Big Beautiful Bill Act reportedly caps the deduction at 90% of your losses, so the arithmetic no longer zeroes out for a break-even player. Second, tax guides have long described the loss deduction as an itemized deduction, so a filer who takes the standard deduction generally can't also subtract gambling losses. Confirm both points in current IRS guidance for your tax year, or with a tax professional.

This page is general information, not tax advice. For the wider picture on what's taxable, see do I pay tax on casino winnings and our full gambling loss deduction explainer. More answers like this sit in our online casino questions hub.

The 90% cap on deducting gambling losses from 2026

Section 70114 of H.R. 1 (119th Congress) amends Internal Revenue Code § 165(d). As summarized by a law firm and reflected in an IRS and Treasury proposed rule, the deduction for losses from wagering transactions equals 90% of those losses and is allowed only to the extent of wagering gains for the year. The change applies to taxable years beginning after December 31, 2025, which means the 2026 tax year onward.

The definition of losses is wide. It reportedly includes any deduction otherwise allowable in connection with conducting a wagering transaction, so related expenses fall under the same 90% limit rather than sitting outside it.

The IRS proposed rule in the Federal Register (opens in a new tab), published April 17, 2026, repeats the 90% wording and the start date. Treat the cap as reported and check final IRS guidance before you file.

A repeal effort exists. Rep. Dina Titus (NV) filed a House amendment to restore the 100% deduction (opens in a new tab) for tax years after December 31, 2025. Whether it became law isn't confirmed, so plan around the 90% figure until the IRS says otherwise.

Can I deduct gambling losses if I broke even? Dollar examples

The rule fits in one line: deductible losses = the smaller of (90% of losses) and (gambling winnings). The table applies it to five simple years and shows how the old 100% rule compares. The figures are illustrations of the reported rule, not a calculation for your return.

The first two rows are the big change. Under the old rule, a player who won $20,000 and lost $20,000 owed nothing on gambling. Under the reported 90% rule, $2,000 stays taxable even though the player is not a cent ahead. The fourth row shows the opposite case: when losses are much larger than winnings, the winnings ceiling bites first and the 90% cap makes no difference.

What counts as a deductible gambling loss

A loss is money you actually lost on wagers. A deposit by itself isn't a loss: if $500 sits in your casino balance, or you withdraw it, nothing was lost. Bonus money works the same way in reverse: a bonus you never cashed out wasn't income, and losing it isn't a loss of your own money.

• Usually counts: losing bets, slot spins, table hands and lottery tickets, as long as you can document them.
• Reportedly counts from 2026: other deductions allowable in connection with conducting a wagering transaction, which now sit inside the 90% limit.
• Doesn't count: money still in your casino account, deposits you later withdrew, or losses you can't support with records.
• Can't be carried: a net gambling loss doesn't reduce other income and isn't described as carrying forward to the next year.

Tracking wins and losses one bet at a time is unrealistic online, so many players log results by session. Our keeping gambling records guide covers practical ways to do that.

Do you have to itemize to deduct gambling losses?

In most cases, yes. Gambling losses have long been claimed as an itemized deduction on Schedule A rather than alongside the standard deduction. That creates an awkward result for many casual players: they must report every taxable win, but if their itemized deductions are smaller than the standard deduction, the losses give them no tax benefit at all.

Because the IRS can update forms and instructions, check the current Schedule A instructions for the year you're filing. If you run a gambling-related business or file as a professional gambler, different rules may apply, and that's a conversation for a tax professional.

W-2G thresholds and withholding when you have losses

A Form W-2G records certain winnings, and it says nothing about your losses. You report all winnings whether or not a form arrives, then deduct losses separately within the limits above. The IRS instructions for Form W-2G (opens in a new tab) set these thresholds for payments made in 2026:

Backup withholding of 24% can also apply if you don't give the payer a correct taxpayer identification number. See what is a W-2G and the W-2G form page for the full rules.

Deducting losses from online and offshore casinos

The tax rules don't change with the type of casino. Winnings from a state-licensed site in Michigan or New Jersey, a riverboat casino or an offshore website are all taxable, and losses from any of them sit under the same ceiling and the same reported 90% cap.

Tax and legality are separate questions. Paying tax on a win doesn't make the site legal where you live, and a site's legal status doesn't change what you owe. Offshore casinos aren't licensed by any US state, and only seven states license real-money online casinos; our pages on offshore casino legality and states with legal online casinos explain the law.

Offshore sites may not send you a W-2G, which shifts the record-keeping burden to you. Read do offshore casinos report to the IRS before you assume anything about what the IRS sees. If you deposit with crypto, price changes can add separate tax questions, so mention them to whoever prepares your return.

Records you need before you deduct gambling losses

A deduction you can't prove is a deduction you may lose in an audit. Build the record as you go, not in April.

If a casino lets you view or download a transaction history, save a copy regularly, because offshore sites can change platforms or close. Our gambling taxes guide explains how these records fit together at filing time.

State income tax and gambling losses

States set their own income tax rules, and their treatment of gambling winnings and losses doesn't have to match the federal one. A state may tax winnings while allowing a different loss deduction, or none, so a federal break-even year can still produce a state bill. Check your state tax agency's guidance, and see our states hub for the gambling law where you live, plus the general gambling taxes overview.

How to claim gambling losses: step by step

1. Add up every gambling win for the year, including wins without a W-2G and wins from online casinos.
2. Report the total winnings as income on your federal return.
3. Total your documented losses for the same year from your log and statements.
4. For tax year 2026 onward, multiply the losses by 90% (the reported cap).
5. Compare that figure with your total winnings and use the smaller number.
6. Check whether itemizing beats the standard deduction for you; if not, the losses won't reduce your tax.
7. Keep your records for as long as the IRS can question the return, and ask a tax professional if the amounts are large.

Common mistakes when deducting gambling losses

• Netting first. Reporting only your net result hides the gross winnings the rules ask you to report.
• Assuming a loss year saves tax elsewhere. Losses beyond winnings don't reduce wages or other income.
• Ignoring the 2026 change. A break-even year no longer means zero gambling income under the reported 90% rule.
• Counting deposits as losses. Only money lost on wagers counts, not money moved into an account.
• Relying on memory. Without a log or statements, the deduction is hard to support.

None of this turns gambling into a tax strategy. Losses are still losses, and the 90% cap means the tax system now shares a little less of them.

If losses are bigger than you planned

Tracking losses for tax can be the first time some players see the full yearly total. If that number worries you, it's worth acting on. The National Problem Gambling Helpline, run by NCPG, is free and confidential at 1-800-MY-RESET (1-800-697-3738) by call or text, with chat through the NCPG helpline page (opens in a new tab).

Practical next steps include setting a gambling budget and reading our pages on gambling and money and gambling and debt.

Gambling losses, taxes and our partner offers

No bonus changes how losses are taxed, and bonus terms can make you wager more than you planned, which grows both your winnings and your losses on paper. The partner casinos below are offshore and not licensed or regulated by any US state, so there's no state regulator to complain to and no state protection of your balance. Check your state's law before you play. New players only, 21+ (18+ where allowed), terms apply.

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The Michigan Gaming Control Board named Silver Oak and Planet 7 in an April 9, 2025 cease-and-desist release (opens in a new tab) about illegal offshore operators. Bonuses are slot-focused; table games are often excluded or weighted lower, and the terms shown at sign-up apply. We earn a commission from these links, and the order is commercial, not a test result.

21+ (18+ where allowed). Every casino game has a built-in house edge, so over time you should expect to lose what you stake. Set a budget before you play and stop when it’s gone: responsible gambling tools and free help. Gambling problem? Call or text 1-800-MY-RESET (1-800-697-3738).