2026 Gambling Loss Deduction: How To Claim The New 90% Limit

When you bet on sports and win, the Internal Revenue Service (IRS) will happily take its cut of your income. However, it is up to you to claim your gambling losses when you itemize your tax deductions.

Gaming platforms like FanDuel and DraftKings will notify the IRS when your winnings exceed a certain amount. But the sportsbooks will not report your net losses.

You have to itemize your deductions to show your gambling losses to offset your winnings. Under new tax rules, you can only claim up to 90% of your losses against your winnings. The new 90% limit applies to gambling losses starting in 2026. For more information about claiming your gambling loss deductions, talk to a local tax law attorney.

Can You Deduct All of Your Gambling Losses?

Before 2026, you could deduct up to 100% of your gambling losses against your gambling winnings. However, under the One Big Beautiful Bill (OBBB) passed in July 2025, you can only deduct up to 90% of your gambling losses.

For example, you bet $10,000 during March Madness. A $100 bet pays off big, winning you $10,000. However, you lose the remaining $9,900 in bets. You have $9,900 in gambling income and $9,900 in gambling losses.

If you made these bets in 2025, you would have no taxable income from gambling. You could deduct the $9,900 in gambling losses against your $9,900 in gambling winnings. However, your tax calculations change under the new 2026 tax bill.

Under the new rule for tax year 2026, you could not claim the $9,900 in gambling losses. You can only claim up to 90% of your deductions against your winnings ($8,910). You must pay your standard tax rate on the gambling income that exceeds 90% of your gambling losses ($990).

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Deducting Sports Betting Losses

Whether you can deduct losses depends on whether you take the standard deduction or itemized deductions. For tax year 2025 (filing in April 2026), the standard deduction is $32,200 for married couples filing jointly and $16,100 for single taxpayers.

For most taxpayers, it is better to take the standard deduction and avoid itemizing. To decide whether to itemize or take the standard deduction, talk to your CPA or tax professional. If you have a large amount of gambling income and gambling losses, it may be better to itemize your deductions.

You can take your sports betting deductions on a Schedule A. The form Schedule A is for itemizing deductions. Gambling losses fall under “Other Itemized Deductions.”

Documenting Your Gambling Losses

You need accurate recordkeeping to claim gambling losses. According to the IRS, you must keep an accurate diary or record of your gambling losses and winnings, including at a minimum:

• Date and type of your specific wager or wagering activity
• Name and address or location of the gambling establishment
• Names of other persons present
• Amounts won or lost

Other documentation of winnings and losses includes Form W-2G, Form 5754, Form 1099-Misc, wagering tickets, and bank statements.

Many sports betting services provide a convenient way to review your gambling activity, including funding, wagers, wins, and losses. For example, FanDuel has a Player Activity Statement to show your net wins and losses, deposits, withdrawals, and betting activity. DraftKings has My Stat Sheet to provide an overview of your sportsbook activity.

Reporting Gambling Winnings With Form W-2G

Sports betting platforms like FanDuel and DraftKings will issue bettors a Form W-2G for certain gambling winnings. Federal tax laws require gaming companies to report taxable income and provide a Form W-2G when winnings minus the wager total $2,000 or more and the winnings are at least 300 times the wager.

Some sports betting apps have their own triggering conditions to issue a Form W-2G. Gambling apps generally follow IRS guidance requiring a Form W-2G for certain gambling winnings of $600 or more ($1,200 for bingo and slot machines or $1,500 for keno).

You should get a W-2G from FanDuel, DraftKings, or other sports apps when:

• Winnings (reduced by wager) are $600.00 or more; and 
• Net winnings are at least 300 times the amount of the wager

Sports betting apps will also withhold money from your winnings for your estimated taxes. Generally, you will have a 24% withholding if net winnings are $5,000 or more with odds ≥ 300:1. To claim your withholdings, you have to file your taxes and report your gambling and losses to see if you qualify for a tax refund.

State Income Tax Deductions

Each state has different rules and tax laws for gambling income and deductions. Some states may require withholding tax on gambling winnings over a certain amount, which varies by state.

States like North Carolina and Illinois do not allow you to take gambling loss deductions, even with proper documentation. Talk to a local tax professional about your state and local tax filing requirements.

Legal Advice for Taking Gambling Loss Deductions

If you’re not sure about what you can claim for gambling loss deductions in 2026, get tax advice from an experienced tax planning professional. Making a mistake on your tax return can flag you for a tax audit.

Your tax advisor or attorney can explain the new tax laws and make sure you can maximize your deductions and reduce your tax liability. Contact a local tax law attorney for help with your sportsbook deductions.