obbba 90% gambling loss deduction cap is live in 2026 - anyone who actually files properly how bad is this actually hitting you

pokerslave55

pokerslave55

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so its july which means we're six months into the 90% gambling loss deduction cap and i haven't seen much discussion about what it's actually doing to people filing taxes properly. so if anyone who missed it - the one big beautiful bill act signed july 4 last year included a provision that caps gambling loss deductions at 90% of losses starting 2026. used to be 100%. now if you win $100k and lose $100k you can only deduct $90k in losses. the remaining $10k becomes taxable income even though you broke even. phantom income on a break-even year.
i know i know most people on here don't think about taxes. but for anyone playing serious volume and actually declaring winnings like a responsible adult this is a real problem. i'm looking at a situation where my 2026 tax liability is going to be materially different from 2025 on the same gambling results.

FAIR BET Act was introduced basically immediately after it passed, still sitting in congress doing nothing. three bills now trying to repeal it. none have moved.
anyone else actually dealing with this or is everyone just not filing
 
well phantom income problem is surely the worst part. the math is straightforward but people don't realize what it means until they run the numbers.

if your total winnings are $200,000 and total losses are $200,000 you've had a break-even year. under 2025 rules: $0 taxable gambling income. under 2026 rules: you can only deduct $180,000 of your losses. $20,000 is now taxable income at whatever bracket you're in. so someone in the 32% bracket owes roughly $6,400 in federl tax on money that doesn't exist. and that's just from breaking even. if you're a semi-professional running high volume the numbers scale fast.
 
Worth adding context on why this provision exists. It wasn't a deliberate gambling policy. The Senate version of the OBBBA had to satisfy the Byrd Rule - a procedural requirement that budget reconciliation bills can't increase the deficit beyond the 10-year window. Various provisions were inserted in the Senate version that weren't in the House version specifically to generate revenue on paper. The gambling deduction cap was one of them. Joint Committee on Taxation estimated $1.1 billion over ten years from it.

So the policy that is now creating real problems for real bettors was included primarily for budgetary accounting purposes, inserted late in the legislative process, and was not in the original House-passed bill. Which explains why you have genuinely bipartisan opposition to it - the FAIR BET Act has Republican and Democratic co-sponsors. Rep. Andy Barr from Kentucky introduced a third bill, the WAGER Act, in July. All three are sitting. The provision was procedural necessity. Repealing it creates the same budget accounting problem.
 
Just imagine this your single year of table:
winnings: $380,000
losses: $365,000
net profit: $15,000

so under old rules: pay tax on $15,000. makes sense, that's what i actually earned.
under new rules: can only deduct $328,500 of losses. suddenly i have $51,500 in taxable income instead of $15,000. tax bill goes up by something like $12,000 on income i did not make. twelve THOUSAND dollars in extra taxes on a year where my actual profit was fifteen. the ratio of that is insane and I was one of the lucky ones who actually had a profitable year. imagine what the break-even players owe.
 
HughRoller said:
Just imagine this your single year of table:
winnings: $380,000
losses: $365,000
net profit: $15,000

so under old rules: pay tax on $15,000. makes sense, that's what i actually earned.
under new rules: can only deduct $328,500 of losses. suddenly i have $51,500 in taxable income instead of $15,000. tax bill goes up by something like $12,000 on income i did not make. twelve THOUSAND dollars in extra taxes on a year where my actual profit was fifteen. the ratio of that is insane and I was one of the lucky ones who actually had a profitable year. imagine what the break-even players owe.
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like you buy a TV for $500 then sell for $500 on a glance you break even. but IRS says your cost basis was only $450 so you made $50 you never actually had. yeah makes perfect sence lol
 
HughRoller said:
Just imagine this your single year of table:
winnings: $380,000
losses: $365,000
net profit: $15,000

so under old rules: pay tax on $15,000. makes sense, that's what i actually earned.
under new rules: can only deduct $328,500 of losses. suddenly i have $51,500 in taxable income instead of $15,000. tax bill goes up by something like $12,000 on income i did not make. twelve THOUSAND dollars in extra taxes on a year where my actual profit was fifteen. the ratio of that is insane and I was one of the lucky ones who actually had a profitable year. imagine what the break-even players owe.
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i mean if u made $380k in a year youre doing ok bro 😭
 
part that bothers me is the W-2G side of this. yeah they raised the slot jackpot reporting threshold from $1,200 to $2,000 which is technically good news. that threshold hadn't moved since 1977 so congrats the government did one good thing. but the W-2G reporting only goes one direction - it records wins and sends them directly to the IRS. losses you have to document yourself and then fight to deduct. now you can only deduct 90% of those documented losses. so the asymmetry in how wins and losses are tracked just got worse. wins: automatic government documentation. losses: your own paperwork, capped
 
i think worth being clear about who this hits and who it doesn't. you have to itemize deductions to claim gambling losses at all. standard deduction is $15,000 for single filers in 2026 after the OBBBA adjustments. anyone whose total itemizable deductions don't clear $15,000 was never deducting gambling losses anyway.
so the cap only bites people who already itemize, which skews toward higher income earners with mortgages and significant other deductions. so the group this hurts most is recreational bettors with high enough income to itemize and high enough gambling volume to have meaningful losses to deduct. mid-to-high income, high volume, compliant filers. specifically targeted the people doing everything right
 
yep @conker and that's exactly me. mortgage so i itemize. enough gambling volume that the deduction was always meaningful. been filing properly for years because i read that you have to and the downside of not doing it is worse. and now the 10% haircut on a break-even year is going to sting
what i genuinely can't wrap my head around is that three separate repeal bills exist, all bipartisan, all stuck, all because repealing it creates a budget scoring problem for congress. the provision was an accident of budget procedure and it's now permanent because no one can agree on how to offset removing it
 
and obviously offshore migration is what we get as the result. professional and high-volume bettors are now facing genuine financial incentive to move volume to platforms that don't feed W-2G data to the IRS. not saying people are doing it. saying the incentive structure changed in a meaningful direction. rep. titus said it directly when introducing the fair bet act: without repeal, gamblers might "shift to offshore platforms and black-market venues." the person who wrote the repeal bill is arguing it will push compliant filers into non-compliance. that's a fairly significant admission about what the cap actually does in practice.
 
watching this from uk andit blows my mind honestly - genuinely sounds like a different country's relationship with gambling tax. here winnings are completely tax free. no W-2G equivalent. no deduction needed because there's no taxation to begin with. the tradeoff is that UK licensed sites have worse RTPs and more restrictions. but bloodyhell at least no one is telling me i owe tax on money i didn't make
 
nataly.k said:
watching this from uk andit blows my mind honestly - genuinely sounds like a different country's relationship with gambling tax. here winnings are completely tax free. no W-2G equivalent. no deduction needed because there's no taxation to begin with. the tradeoff is that UK licensed sites have worse RTPs and more restrictions. but bloodyhell at least no one is telling me i owe tax on money i didn't make
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hmm winnings tax free? that's actually... i need a minute
 
Got some bad news for you guys - the UK model doesn't tax player winnings because the tax is collected entirely at the operator level through Remote Gaming Duty and General Betting Duty. Which was 21% on remote gaming until April 2026, when it jumped to 40%. So players in the UK aren't taxed directly but the operators now pay 40% on gross gaming yield which predictably flows through to worse RTPs and smaller bonuses. Different mechanism, similar effect on the player's actual wallet. Just distributed differently.
 
american system and uk system have both arrived at roughly similar conclusions this year through completely different routes. US: tax the player directly on net winnings with a deduction cap. UK: nearly double the operator tax and let the market pass it through. both produce worse outcomes for players than last year. the approach differs but the direction doesn't
 
what i'm genuinely uncertain about is whether the FAIR BET Act actually passes before 2026 tax returns are due. even if it passes in late 2026 or early 2027 retroactive application to 2026 isn't guaranteed. which means everyone in this thread filing properly for 2026 should probably plan for the 90% cap and treat any retroactive relief as upside rather than expected outcome.
 
vogafox said:
what i'm genuinely uncertain about is whether the FAIR BET Act actually passes before 2026 tax returns are due. even if it passes in late 2026 or early 2027 retroactive application to 2026 isn't guaranteed. which means everyone in this thread filing properly for 2026 should probably plan for the 90% cap and treat any retroactive relief as upside rather than expected outcome.
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yeah been told the same by my tax guy. file for 2026 as if the cap applies. keep detailed records. if repeal passes retroactively file amended returns. don't count on it
 
so practicaly keep every single piece of documentation for 2026. session logs, withdrawal records, screenshots of win/loss statements from every book. because the 10% of losses you can't deduct at least needs to be clearly established or the IRS just sees gross winnings with no offsetting losses at all
the record keeping requirement went up while the deduction went down. both directions worse for the player
 
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