Deducting gambling losses under the 90% rule

You can deduct 90% of your gambling losses for the year, and no more than your gambling winnings. For recreational gamblers the deduction only exists if you itemize on Schedule A.

Before 2026 you could deduct 100% of losses up to winnings. The One Big Beautiful Bill Act cut it to 90%.

Win $20,000 and lose $20,000 over a year and you broke even. You can deduct $18,000, so $2,000 is taxed as income anyway.

Win $20,000 and lose $30,000 and you can still deduct only $20,000 at most, and 90% of $30,000 is $27,000, so the cap at winnings binds: $20,000.

On a joint return, spouses combine their winnings and losses before the limit applies.

The deduction only helps if your itemized deductions, losses included, beat the standard deduction: $16,100 single, $32,200 married filing jointly, $24,150 head of household for 2026.

Someone with $5,000 of winnings, $5,000 of losses and no mortgage takes the standard deduction and pays tax on the full $5,000. Your winnings are still reported in full; losses can't be netted against them on the front of the return.

If your income reaches the 37% bracket, a new limit reduces itemized deductions by 2/37 of the smaller of the deductions or your income above the start of that bracket. The law has no exception for gambling losses, so they're trimmed too. The IRS hadn't published its worksheet for this when we checked.

No deduction for gambling losses at all: Connecticut, Illinois, Indiana, Kansas, Louisiana, Ohio, Rhode Island, South Carolina, Vermont and Wisconsin.

Losses netted against winnings without itemizing: New Jersey and Pennsylvania.

Limited deductions (for example, only losses at in-state venues): Massachusetts, Mississippi, Utah and West Virginia.

States that have not adopted the 90% limit, so allow 100% on the state return: Arkansas, California, Massachusetts, New Jersey, New York, Pennsylvania and West Virginia.

Most other income-tax states follow the federal itemized deduction. Each state page has the details and the source.

No law has restored the 100% loss deduction. The FULL HOUSE Act (Title VII of H.R. 10357) would restore it back to 2026. House Ways and Means approved it on September 16, 2026; it still needs a House vote, the Senate and a signature. If it passes as introduced, you could amend or file your 2026 return using 100%. Until then, plan on 90%.