Gambling

If you gamble, there are two major tax changes that took effect in 2026 that could affect your tax return. The first change impacts the deduction for gambling losses. Beginning with 2026 tax returns, taxpayers who itemize deductions can deduct only 90% of their gambling losses, and those losses can only be claimed up to the amount of their reported gambling winnings. This is a change from previous years, when qualifying losses could generally offset winnings dollar for dollar. The second change raises the reporting threshold for certain gambling winnings. Starting with Forms W-2G issued for 2026 winnings, casinos and other gambling establishments are required to report winnings of $2,000 or more from slot machines, bingo, and keno. Previously, the reporting thresholds were $1,200 for slot machines and bingo and $1,500 for keno. Going forward, the $2,000 threshold will also be adjusted annually for inflation.

If you participate in online sports betting or fantasy sports for cash prizes, any winnings are considered taxable income. This includes wagers on sporting events like the Super Bowl, the World Series, March Madness, or other sporting competitions, as well as fantasy sports contests where prizes are based on athletes' performances.

These winnings must be reported on Schedule 1 (Form 1040), line 8b. If you itemize deductions, you may deduct 90% of your gambling losses, but only up to the amount of your reported gambling winnings. In some situations, individuals who gamble regularly and operate their activity like a business may qualify to report their gambling income and expenses on Schedule C. However, meeting the IRS requirements to be treated as a professional gambler can be challenging and depends on the facts and circumstances of each case. Online sportsbooks and casinos are also subject to the updated reporting rules and generally must issue Form W-2G when a taxpayer's winnings reach the applicable reporting threshold.