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New for 2026: you can only deduct 90% of your gambling losses.

Signed into law in July 2025 (the One Big Beautiful Bill Act, amending IRC §165(d)) and effective for tax years beginning January 1, 2026. Losses are deductible only up to 90% of losses — still limited to your winnings, and still only if you itemize.

Win $100,000, lose $100,000, owe tax on $10,000 — only 90% of losses are deductible from tax year 2026 (IRC §165(d) as amended).

The worked example

Meet Alex — a year that was genuinely down:

The 90%-cap worksheet · tax year 2026

Winning sessions$12,400

Losing sessions$13,000

Real result — actually down−$600

Deduction cap: 90% of losses$11,700

Losses that simply vanish−$1,300

Taxable gambling income$700

A losing year that owes roughly $154 in federal tax at an assumed 22% bracket — an estimate for illustration; your rate depends on your full return. The dataset behind this example is the same one used everywhere it appears, so the math always ties out.

Why your winnings number is now the whole game

Under the cap, every dollar of overstated winnings is a dollar taxed with only 90-cent offsets. Filing from gross W-2G totals was expensive before; now it compounds. The session method computes the smallest defensible winnings figure — and that figure is the only lever you control.

Nobody has ever filed under this rule

Tax year 2026 returns — filed in spring 2027 — are the first ever computed under the cap. Your CPA hasn't seen it in practice either, because nobody has. Bring them the worksheet, not a shoebox.

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