Gambling Losses Tax Calculator 2026: 90% Deduction Rule

What changed in 2026

Section 70114 of the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, rewrote IRC Section 165(d) for tax years starting January 1, 2026. You can now deduct only 90% of your gambling losses, and still only up to the amount of your gambling winnings. Before 2026, losses were deductible dollar for dollar against winnings. The 10% haircut is the part that creates tax out of thin air.

Worked example

Winnings: $100,000, losses: $100,000, a perfectly break-even year.

Deductible losses: 90% x $100,000 = $90,000 (capped at winnings).
Taxable gambling income: $100,000 - $90,000 = $10,000.
At a 24% bracket, that is $2,400 of federal tax on a year you broke even.
Under the 2025 rules, the same year produced $0 of taxable gambling income.

Phantom income, explained

Phantom income is tax on money you never really had. Because the deduction is capped at 90% of losses, at least 10% of your losses (up to your winnings) always counts as taxable income. A slot player who hits $35,000 in jackpots and gives it all back walks out broke but reports $3,500 of taxable income. The rule hits frequent, high-volume bettors hardest, because their gross winnings are large even when their net is zero.

You still have to itemize

Gambling losses are an itemized deduction. If you take the standard deduction, you get no benefit from your losses at all, and your full winnings are taxable. The calculator assumes you itemize; uncheck the box to see the standard-deduction outcome.

Professional gamblers are not exempt

The 90% limit applies to everyone, recreational and professional. OBBBA also made permanent the rule that gambling-related expenses (travel, tournament entry fees, supplies) count inside the same 90% limitation, rather than as separate business deductions.

Keep session records

The IRS measures wins and losses per gambling session, not per bet. Keep a contemporaneous log: date, location, game, amounts won and lost, plus W-2G forms, casino win/loss statements, and receipts. Good records are what let you defend the deduction in an audit.

State taxes

States have their own rules and many do not conform to the federal change automatically. Some states disallow gambling loss deductions entirely. Check your state's 2026 rules before assuming the federal math applies.

More 2026 tax calculators

The same 2025 tax law (OBBBA) created three more provisions worth checking: the No Tax on Tips Calculator 2026 for tipped workers, the Senior Bonus Deduction Calculator 2026, an extra $6,000 per person for filers 65 and older, and the Sports Betting Tax Calculator 2026 for per-state tax on gambling winnings.

This calculator is an estimate, not tax advice. Gambling tax rules are technical and changing; confirm your situation with a tax professional.

Planning estimate only. Results use the list prices shown and may differ from your actual bill. Terms

Frequently asked questions

What exactly changed for 2026?

OBBBA Section 70114 limits gambling loss deductions to 90% of your losses, capped at your winnings, starting with the 2026 tax year. Before 2026, losses were deductible dollar for dollar against winnings.

Does the 90% rule apply to professional gamblers?

Yes. The statute has no exception for professionals or for gambling as a trade or business. Business-style expenses like travel and entry fees now count inside the same 90% limitation.

What is phantom income?

Taxable income with no matching cash. Because only 90% of losses are deductible, 10% of your losses (up to your winnings) is always taxable, even in a break-even year. A $100,000 win with $100,000 in losses produces $10,000 of taxable income.

Do I have to itemize to deduct gambling losses?

Yes. Gambling losses are an itemized deduction. If you take the standard deduction, your losses give you no tax benefit and your full winnings are taxable.

Can I carry unused gambling losses to another year?

No. Gambling losses cannot be carried forward or back. They only offset winnings in the same tax year, and they can never create a net gambling loss for tax purposes.

What records should I keep?

A contemporaneous log of each session (date, location, game, amounts won and lost), plus W-2G forms, casino win/loss statements, and receipts for related expenses. The IRS looks at sessions, not individual bets.

Do tournament entry fees count as losses?

Yes, under the permanent OBBBA rule, expenses incurred in connection with wagering (entry fees, travel, supplies) count as wagering losses inside the same 90% cap, rather than as separate deductions.

Do states follow the 90% rule?

Not automatically. Many states do not conform to the federal change, and some disallow gambling loss deductions entirely. Check your state's 2026 conformity before filing.

Gambling Losses Tax Calculator 2026