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New US tax law to affect taxpayers’ gambling loss deduction
New changes in US tax law will limit a taxpayer’s ability to deduct 100% of their gambling losses, decreasing it to 90%, leaving the 10% to be taxed.
Gambling taxes are usually regulated at the state and federal levels. All winnings are treated as taxable income, and the tax rate can range between 10% and 30%.
Now, the gambling industry and its lobby are fighting back to reverse the changes before the 2026 tax year hits. Nevada Representative Dina Titus has introduced the FAIR BET Act, which aims to bring the deduction back to 100%, while operators and lobbyists have met with Jason Smith, the House’s Ways and Means Committee’s Chair, to get an expedited hearing on the bill.
The issue first gained popularity when President Trump was asked about a repeal of gambling taxes.
He answered:
“I haven’t been asked that question in a long time. No tax on gambling? We have no tax on tips, we have no tax on Social Security, and we have no tax on overtime. No tax on gambling winnings? I don’t know about that. I’m going to have to think about it.”
The new law is likely to bring in billions in revenue over the coming 10 years, but it is also likely to disincentivize gambling as a profession.
It’s expected that lawmakers will make an announcement around December 19, 2025, leaving a very short window for the opposition to reverse the bill.
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