As sports betting and online gambling continue to grow in popularity, taxpayers should be aware of two important tax law changes that are now in effect for the 2026 tax year.

Lower Deduction For Gambling Losses

Beginning with 2026 tax returns, taxpayers who itemize deductions will only be able to deduct 90% of their gambling losses, and only up to the amount of their gambling winnings.

Previously, gamblers could deduct 100% of their losses up to their winnings. This new limit means some taxpayers could end up paying tax on gambling income, even though their losses offset their winnings.

For example, if you have $10,000 of gambling losses and $10,000 of gambling winnings, you’ll only be able to deduct $9,000 of those losses, leaving $1,000 as taxable income.

Higher Reporting Thresholds for Casinos

The IRS has also increased the reporting threshold for certain gambling winnings. Slots, bingo, and keno winnings must now reach $2,000 before a W-2G is required to be issued. Previously, the threshold was $1,200 for slots and bingo, and $1,500 for keno.

It’s important to remember that all gambling winnings, including online sports betting, must be reported on your tax return, even if you don’t receive Form W-2G from the casino or betting site.

Keep Good Records

With the likely reduction in W-2Gs being issued, maintaining accurate gambling records is more important than ever. Taxpayers should consider keeping:

• Betting slips and tickets
• Casino win/loss statements
• Sportsbook account records
• Documentation of gambling sessions

Disclaimer: This blog content is for general informational purposes only, should not be considered professional advice, and does not establish a client relationship. Haworth and Company is not liable for the accuracy of this information or the content of external links. Please use this information at your own risk, ensuring it suits your specific needs, and consult with a certified tax professional for your own personalized guidance.