How Much will Vegas Matt Pay in Taxes under the New 90% Loss Limit?

How much do you think Vegas Matt and others like him will be paying in taxes under the new legislation?

We don't know how much Vegas Matt and other high-rolling gamblers will pay in taxes, but we do know that whatever they would've paid in taxes for 2026 before the changes in the tax code last year, it'll be at least 10% more, so far anyway.

With the deduction capped at 90% of losses, this adds what sounds like an not-manageable burden, 10 cents on the dollar. But in fact, it's a horrendous and unfair punishment that taxes money a taxpayer didn't earn.

Say Vegas Matt wins $1 million and loses $1 million in 2026. Under the old law, he could deduct the full $1 million in losses against the winnings, so he'd owe no income tax on his gambling for the year. That's fair, because he had no gambling income at all.

Under the new 2026 rule, his maximum deductible loss is only $900,000. So the taxable gambling income would be $100,000.

This creates $100,000 of "phantom" earnings, on which Matt would owe, depending on his tax bracket, somewhere between $24,000 (in the 24% bracket) all the way up to $37,000 (in the highest federal tax bracket).

Of course, filing as a professional gambler, Matt can deduct other expenses against his winnings, such as travel, lodging, and food. But that 24%-37% is tough to overcome, especially when a lot of those expenses are comped. And consider this: What if he wins $10 million and loses $10 million, which isn't beyond the realm of possibility for whales. Multiply all those numbers by 10 and Matt's looking at taxes between $240,000 and $370,00 on phantom earnings!

To us, this is iniquitous, injurious, and infuriating. Dishonorable, discreditable, and unscrupulous. (Too bad this is a family publication; otherwise, we'd be tempted to indulge in a little lalochezia.) What's more, every attempt to rescind this travesty has been met with indifference, refusal, or a wink and a shrug.

That last bit is particularly vexing. A few weeks ago in the latest failed attempt to roll back this tax, Nevada Rep. Dina Titus, a Democrat, testified before the House Rules Committee. She noted that 25 other legislators on both sides of the aisle were co-sponsoring her proposal. Rep. Max Miller of Ohio, a Republican, said returning the deduction to 100% would be “aligning tax liability with actual economic reality.”

To all that, Rep. Jim McGovern from Massachusetts, a Democrat and the ranking member of the Rules Committee, said, “Your bipartisan amendment sounds like a no-brainer, which probably means it won’t [go anywhere]. I hope I’m wrong on that. … It just seems to be common sense. Why should you be taxed on money you don’t earn?”

Sure enough, the Rules Committee didn't even bother voting on it and it never made it out of the committee.

Tune in tomorrow when we explore what could be the real reasons for this onerous tax policy.

No part of this answer may be reproduced or utilized in any form or by any means, electronic or mechanical, without the written permission of the publisher.

Have a question that hasn't been answered? Email us with your suggestion.

Missed a Question of the Day?

Have a Question?

Tomorrow's Question

Is the state of Illinois really not complying with the new IRS tax-reporting threshold of $2,000?

Comments

VegasVic Feb-08-2026

Ridiculous

There may be "bi partisan" support to reverse this but the rule committee has 9 GOP members and 4 Dems.  It didn't get a vote because the GOP wouldn't allow it.  Contact them 

Chairwoman Virginia Foxx (R-NC)	
Rep. Michelle Fischbach (R-MN)	
Rep. Ralph Norman (R-SC)	
Rep. Chip Roy (R-TX)	
Rep. Erin Houchin (R-IN)	 
Rep. Nicholas A. Langworthy (R-NY)	 
Rep. Austin Scott (R-GA)	 
Rep. H. Morgan Griffith (R-VA)	 
Rep. Brian Jack (R-GA)

Lucky Feb-08-2026

Patience

It will be repealed, but not until before the 2027 filing date for 2026 taxes.  It will not be a stand alone bill, it will be included in something else.  Its a matter of timing, and during budget negotiating, anything that will decrease federal income will not be thrown in.  It will end up in some bill that has nothing to do with budgets.  Both sides will get kudos for the repeal, and it will happen.  Of course there is never a certainty.  I already hit a jackpot greater than $10k, and I will owe taxes on $1100, even though the trip itself was almost a loser.

Dan Pragel Feb-08-2026

Question about expenses

Do expenses count differently than losses? In other words, let's say a professional gambler had $10,000 in winnings, $10,000 in losses, and $1000 in gambling expenses. Under the new law, only $9000 dollars of the losses can cancel out the winnings, leaving $1000 in winnings as income. Can the $1000 in expenses cancel out the rest of the winnings? This article seems to imply the answer is yes, but I'm just asking to make sure I'm understanding it correctly.

David Miller Feb-08-2026

Vegas Vic

  You forgot to say just how the 4 Dems voted - you only listed the Republicans without stating how each Republican voted. How did each of the Dems vote?

David Berton Feb-08-2026

Taxes

You forgot to add in your state tax.
Personal Income Tax for California is a graduated rate 1% to 13.3%.

Bob Nelson Feb-08-2026

David Miller

Read it again, they didn’t allow a vote to occur.  You won’t find a record of votes that never happened…

Scotski Feb-08-2026

90% of LOSSES

So, if you win $100,000 and lose $150,000, you can deduct up to 90% of the $150,000, which is $135,000. You can claim $100,000 in losses against $100,000 in winnings. You don't pay any taxes on the winnings. Correct?

People seem to talk about only claiming the losses against 90% of the winnings.

Which is it? 90% of losses or 90% of winnings?

David Miller Feb-08-2026

Bob Nelson

 Just how did the Republicans "not allow" a vote to happen? Do tell...

John Dulley Feb-08-2026

Mike Johnson

Mike Johnson, gotta love him and his’christian’ better than though moral high ground. If it didn’t get out of committee you can thank him. If he would give the ok there would be a vote on it..

Jon Miller Feb-08-2026

Add this to the list for the midterm elections

I can't guarantee a Democratic majority House moves this bill;  but I can guarantee a Republican majority House did not.  I'll take that bet....

Marcus Leath Feb-08-2026

Elect Democrats

If you want to reverse the horrible tax on gambling, the voters must get rid of Mike Johnson and the republican majority.

John Feb-08-2026

Lalochezia

I cannot wait to slip that one into a conversation!  Thanks Deke!

Deke Castleman Feb-08-2026

John

The pleasure is mine. When you use it, it's pronounced la-lo-KEY-zia.

VegasVic Feb-08-2026

David

The Majority party decides when/if to vote.  They didn't.  THERE WAS NO VOTE.  JFC.

John Feb-08-2026

Deke Is The Greatest!

Thanks Deke!!

Lucky Feb-09-2026

California

David B. CA has not adopted the same rule as the IRS, as of yet.  They probably will, though.

Question of the Day - 08 February 2026

Comments