Question of the Day - 31 December 2025

...by giving massive tax breaks to big corporations and the wealthy, you have to make that up somehow, by increasing taxes somewhere else. The various and sundry mouth-breathing that accompanied the Big Pig Bill suggested that MAGA thought (and still thinks) that gamblers are an easy target. Though taxing phantom income is grossly unfair, they calculated that given the public perception of gamblers, there wouldn't be all that many objections. But in keeping with their general ignorance about ordinary people's lives, they didn't understand that these days, everyone and their poodle gambles. The blowback has been greater than they thought.

 The forthcoming "tax breaks" are across the board - not just to corporations and the wealthy but also to every American. No where in the Big Beautiful Bill is there any mention of gamblers being a "target" - that misguided thought is just a lie. Those who gamble will still continue to do so pretty much unabated- and , as the answer to the question states, the 90% deduction will revert back to 100% deduction in 2026, long before next years tax filing season. At present, all that is being said is just noise. The "blowback" is mostly from professinal gamblers and not from the average gambler. 

Everyone who receives a W2G will be affected.  They have to claim it and can only deduct 90% of their losses.  That's anyone and everyone who won $1200+.  Those aren't professional gamblers. It was the usual GOP idiots who put this in the dumb bill in the first place.   

 

The reality is that, in some ways, (I thought I would never say this) Kevin is correct.  The reality is that big business (outside of gaming) donates a lot of money, so they need another target. Gamblers.  I think that, when it comes down to the final negotiations, the 90% rule will stay. They will not hold up the passage of any bill in congress just for gamblers.  Its easy money for them to spend. Kevin is right, everyone gambles, and the blowback is huge, but the blowback, and the tax correction to remove the blowback, does not line the pockets of congressmen and women enough to worry about, so, in the end, it will not be repealed.

The 100% or 90% rule only affects people who itemize deductions.  If you use the standard deduction and receive a W2-G, you need to report the entire amount as income on your tax return. That is the part of the IRS code that really affects the average person.

Vic, the way I think it works, you can only deduct 90% of your winnings, not 90% of your losses.  Your $2000 jackpot with the W2G, you can only deduct $1800 of losses against it, even if you lost $20,000 next year.  So if you have $10,000 of W2G's next year, you are paying taxes on $1,000 no matter what.  Bob Dancer talks about a "session" method that some gamers use, that may be a work around the new tax law.  I checked with my accountant, and was told, if you try to deduct more than 90% of your W2G's, you will most likely get triggered for an audit.  She had no experience with the session method, so could not say if it will work or not. Note that you are supposed to show every win on your taxes, W2G, or not.  Will be very interesting how it all works out next year.

Yes that's what I meant, I didn't word it clearly.  You are correct. 

You should only have to pay income tax on your NET income, from any source. But the killer is that in order to report the losses that balance out your (W2-G) wins, you have to itemize...and doing so blots out your standard deduction! Damned if you do and damned if you don't!

Even a simpleton knows that if you win $10,000 and lose $10,000, you've made nothing; your income from that is zero. But the new Trump IRS policy tells us that in that instance, you've made $1000 and owe taxes on that.

Income tax on nonexistent income. Welcome to surreal Trump Land, where the government is a thief.

 All of the hand wringing will become moot when the change is made from 90% to 100%. Everyone seems to forget that the change will not take effect until the fiscal year 2026 - if at all. The rule has nothing to do with 2025 winnings/losses. I imagine that beginning tomorrow there will be a whole year to look forward to a steady flow of complaints and tears for something that has not - and most likely will not - happen. 

the taxes for the rich are permanent! For the rest of us its temporary.  The top never had it so good!!! The top rate was 90% after WWII !  We need a sunset tax bill that doubles the top 1% till the national debt is below 100 billion!  They will increase their wealth despite the increase in taxes!!! IF THEY WERE PATRIOTS THEY WOULD ADVOCATE FOR THIS!

Flat tax 

As a low ball gambler and one who has the innate tendency to swim against the tide I will say this. If you gamble for a living  you should have the right to deduct all legitimate  expenses.  But if you gamble  as a pastime every time you win on a slot  pull or blackjack or craps at most your only expenses is that particular bet. That you choose to take the money  you won and reset all is it any less income.  If I bet the lottery and win a jackpot.  The fact that I then choose to spend on more lottery  tickets doesn't  stop it from  being income. The fact that you choose  to blow  your  winnings ings on more gambling doesn't make what you  wo any less income. In fact the two thousand  w2 actually let's you get away without  paying income  tax for the winnings less then that.

First of all, the issuance or non-issuance of a W2-G has no bearing whatsoever on your tax liability. You owe taxes whether or not a third party reports your income 

Second, if losses couldn't offset winnings, then if you spent a hour at a blackjack table betting $25 a hand and you won 20 and lost 20 hands, you'd have "income" of $500 and would have to pay taxes on it.

The IRS in most cases allows you to deduct/subtract from income (non-wage) the costs of obtaining that income. That's simple fundamental fairness. 

Kevin of course it's income whether you get a w2 or not but you and I know nobody reports it. My point is that each is a separate event after which you could choose whether or not  to quit. Nothing in choosing to continue to gamble makes it any less your winnings you are gambling.  I know must gamblers don't appreciate this logic.  But I think it is part and parcel of rejecting the casino logic that when you win you are playing with their money. Please know I respect your post and probably agree with 95% of them.

For many years the IRS has tried to say that losses couldn't realistically be over 90% and tried a few times in audits to use that figure.  The courts didn't back them so they had to back off.  So the IRS just got Congress to write it into law.

My sources tell me that the casino lobby is extremely strong and powerful.  The prevailing thought is that the 90% rule will be changed before the tax filing begins.