What Is the 90% Rule in Gambling? - Sports Betting Tax Calculator

The 90% rule in gambling is a new federal tax rule for 2026: you can only deduct 90% of your gambling losses against your winnings, instead of 100%. It applies to every bet placed in 2026, and it only matters if you itemize deductions.

Here is what it does. Win $10,000 and lose $10,000 and you broke even, but only $9,000 of the losses count, so you owe tax on $1,000 you never kept. It is current law. A bill to repeal it passed a House committee in September but has not become law.

The calculator below runs your own numbers under the 90% rule and under a repeal. The sections after it answer the questions people ask next. This is education, not tax advice; talk to a CPA before you file.

The Sports Betting Tax Calculator

Can You Only Write Off 90% of Gambling Losses Now?

Yes, starting with the 2026 tax year, and only if you itemize. The change is Section 70114 of the One Big Beautiful Bill Act, signed July 4, 2025, which rewrote the gambling-loss rule in Section 165(d) of the tax code.

The new text says the deduction "shall be equal to 90 percent of the amount of such losses during such taxable year," and that it is still "allowed only to the extent of the gains" from gambling in that same year.

Two things did not change. Losses still cannot exceed winnings, so a losing year never produces a deduction against your salary. And the deduction still lives on Schedule A, which means you have to itemize to claim any of it. The IRS's own summary of the basics is Tax Topic 419, Gambling Income and Losses.

The haircut is permanent for the year. The 10% you cannot deduct does not carry forward, does not offset anything else and does not come back if you lose more next year.

Treasury's proposed regulations from April 2026 apply the 90% figure to your annual totals, so it is one calculation at the end of the year, not bet by bet.

Under the old rule, breaking even cost you nothing in April; under the new one, breaking even is a taxable event.

Do You Have to Pay Taxes on Sports Betting if You Lose Money?

Sometimes, and 2026 made "sometimes" more common. There are three different situations, and most people are in the first one without realizing it.

If you take the standard deduction, you owe tax on every dollar you won, full stop, whether you finished the year up or down. Losses only count when you itemize, and roughly nine in ten taxpayers do not, according to the Tax Policy Center.

The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, so your mortgage interest, state taxes, charitable gifts and 90% of your betting losses would have to beat that number before itemizing helps.

If you itemize and roughly broke even, the 90% rule creates income out of nothing. KPMG's walkthrough uses $101,000 won against $100,000 lost: real profit of $1,000, but $11,000 of taxable gambling income, because only $90,000 of the losses count.

Scale it down and the shape is the same. Win $5,000, lose $5,000, pay tax on $500.

If you itemize and lost far more than you won, the new rule may not touch you. Win $10,000 and lose $15,000: 90% of $15,000 is $13,500, which still covers the $10,000 of winnings, so your deduction is capped at $10,000 exactly as it was before.

The rule bites hardest on people whose wins and losses are close together, which describes most regular bettors in most years.

Then there is your state, which is its own question below.

Why Did Congress Change the Gambling Loss Deduction?

Money, mostly procedural money. The provision was written on the Senate Finance side during the budget reconciliation process, where every section has to raise or cost a scored amount.

The Joint Committee on Taxation put the 90% limit at roughly $1.1 billion in new revenue over the budget window, and the Tax Foundation traces it to the expiring 2017 limit on professional gamblers' expenses that needed a replacement.

The industry noticed late and objected loudly. The American Gaming Association, DraftKings, FanDuel, MGM, Caesars and Wynn all lined up behind repeal within weeks.

The argument from the betting side is that the rule pushes high-volume players, who are a large share of legal handle, toward offshore books that do not report anything, which would shrink the tax base it was meant to grow.

Is the 90% Rule Going to Be Repealed?

It might be. It has not been. As of this writing, here is the complete record.

• July 2025: Rep. Dina Titus (D-NV) introduces the FAIR BET Act (H.R. 4304) to restore the 100% deduction. Sen. Catherine Cortez Masto (D-NV) tries to pass the Senate version (S. 2230) by unanimous consent; one objection, from Sen. Todd Young (R-IN), stops it.
• September 2025 and January 2026: two attempts to attach the fix to other bills fail in the House Rules Committee and on the floor.
• September 14, 2026: Ways and Means Chairman Jason Smith folds the fix into H.R. 10357, the Digital Asset Tax Certainty Act, with language making it retroactive to January 1, 2026.
• September 16, 2026: the committee reports the bill 38 to 5, a lopsided bipartisan vote.
• Since then: nothing. The House left for the midterm elections without a floor vote, and the Senate has not acted. Titus's own statement that day was explicit that both chambers still have to pass it.

So the realistic range of outcomes for your 2026 return is two-sided, which is why the calculator above shows both. If a retroactive fix passes before filing season, you file under 100%.

If it passes after you file, you would likely need an amended return to claim the difference, which is a reason to keep every record either way. If it never passes, 90% is the rule. Nobody who tells you confidently which of those will happen actually knows.

How Much Tax Will I Pay on a $100,000 FanDuel Win?

Less than the withholding suggests, or more, depending on what else you earn. Withholding and the tax you owe are two separate things.

Withholding only happens on a big longshot. Under the IRS instructions for Form W-2G, a sportsbook withholds 24% federal tax when your net winnings on a single bet are more than $5,000 and at least 300 times the wager.

A $100 parlay that pays $100,000 qualifies; you would see about $24,000 held back. A $55,000 moneyline bet that returns $100,000 does not qualify, because 300-to-1 is nowhere close, so nothing is withheld and the full amount lands in your account.

The tax you owe is figured on your whole year. For a single filer with no other income and no losses, $100,000 of winnings minus the $16,100 standard deduction leaves $83,900 of taxable income, which works out to roughly $13,200 of federal tax under the 2026 brackets.

Stack the same $100,000 on top of an $80,000 salary and most of it falls in the 24% bracket, so the bill is closer to $22,000 to $24,000. Then add your state. Florida, Texas, Tennessee and Nevada add nothing; Illinois adds 4.95% of the gross; New York could add up to 10.9%.

And remember the 90% rule sits underneath all of that if you also had losses and itemize. Our bet payout calculator tells you what a ticket pays before you place it; the calculator at the top of this page tells you what the government's share looks like after.

Did the W-2G Rules Change Too?

Yes, and in your favor, which is the part of this law nobody talks about. The same bill raised the reporting floor for a W-2G from $600 to $2,000 for payments made in 2026, indexed to inflation after that.

For sports betting, the IRS's revised W-2G instructions now say a form is issued when a single bet's net winnings reach the $2,000 threshold and pay at least 300 times the wager.

In practice, almost no spread, moneyline or total ever hits 300-to-1, so most sports bettors have never received a W-2G and still will not. That has never meant the money is tax-free.

The IRS requires you to report all gambling winnings on Schedule 1 whether or not anyone sent you a form, and with sportsbooks keeping a complete record of every account, "nobody reported it" is not a strategy.

Which States Tax Gambling Winnings Even if You Lost?

This is where the 90% rule stops being the worst thing on the page. A handful of states tax your gross winnings and do not allow any loss deduction at all, for casual bettors, at any percentage. If you live in one, breaking even has always been a taxable event at the state level.

Other states follow the federal result more or less. New Jersey lets you net same-year losses against winnings right on the NJ-1040 and did not adopt the federal 90% cap. Michigan allows a loss subtraction, but only if you itemized federally. Massachusetts only recognizes losses incurred at Massachusetts-licensed operators.

Pennsylvania, New York, Colorado, Arizona, Virginia and Maryland each have their own treatment, and the calculator approximates those as "follows federal" with that label attached. Nine states have no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

What Records Do I Need to Deduct Gambling Losses?

More than a screenshot of your account balance. The IRS wants what it calls "an accurate diary or similar record" of your winnings and losses, backed by documents, and Publication 529 spells out what a diary entry contains: the date and type of wager, the name and location of the sportsbook, who was with you, and the amount won or lost.

Online betting makes the documents easy and the diary annoying. Every legal sportsbook will produce an account statement covering the year, under names like Player Activity Statement at FanDuel or the Document Center at DraftKings, and those statements are your proof. They are not tax forms, and they do not replace the diary.

David's approach has been boring and correct: a spreadsheet with one row per bet, exported from each book monthly, so that the year-end totals are a sum, not a reconstruction. Under the 90% rule, that spreadsheet is worth real money, because the deduction you cannot document is a deduction you do not get.

A word on the "session method." You will see tax blogs suggest that online bettors can net wins and losses within a session and report only the session result, which would shrink the gross winnings number the 90% rule bites into.

The legal basis for sessions comes from slot-machine cases, and no IRS ruling or court decision has defined a session for sportsbook wagering.

Some preparers take that position; it is a position, not a rule, and it is exactly the kind of thing to put in front of a CPA rather than decide from a blog post, including this one.

Is It Worth Claiming Gambling Losses on Your Taxes?

Only if itemizing beats the standard deduction, and for most bettors it will not. Add up your state and local taxes (capped), mortgage interest, charitable gifts and 90% of your gambling losses.

If that total is below $16,100 single or $32,200 married, the standard deduction is bigger and your losses simply do not enter the return. You still owe tax on your winnings; the losses just never helped.

If you are close to the line, the arithmetic can flip. A bettor with $20,000 of other itemized deductions and $15,000 of losses has $33,500 to itemize under the new rule, which beats the married standard deduction and makes the losses worth claiming.

That is the one scenario where the 10% haircut is a real, countable cost rather than a footnote, and it is worth running your own numbers in the calculator with the itemize setting on and off.

None of this changes the math of the bets themselves. Taxes come after the result; bankroll management comes before it, and the second one decides whether there is anything for the first one to tax.

Frequently Asked Questions

What is the 90 percent rule in gambling?

A 2026 federal tax rule that limits the gambling-loss deduction to 90% of your losses, still capped at your winnings and still available only if you itemize. It comes from the One Big Beautiful Bill Act and applies to tax years beginning after December 31, 2025.

What is the $3,000 loss rule?

That is a different rule for a different kind of loss. Capital losses on stocks or crypto can offset up to $3,000 of ordinary income per year, with the rest carried forward (IRS Topic 409). Gambling losses never offset other income and never carry forward.

Does the 90% rule apply to 2025 taxes?

No. Returns for 2025, filed in early 2026, use the old 100% rule. The 90% limit first applies to 2026 activity, reported on the return you file in 2027.

Do I get taxed if I made less than $600 on a gambling site?

Yes. There is no minimum. The old $600 figure (now $2,000 for 2026) was only the threshold for the sportsbook to send a W-2G, and even then only on 300-to-1 payouts. All winnings are taxable income regardless of amount or paperwork.

Will a sportsbook send me a 1099 for bonus bets or promos?

Daily fantasy sites have historically issued a 1099-MISC for net prizes above the reporting floor, which rises to $2,000 for 2026. How sportsbooks report promotional credits is not settled by IRS guidance, so do not assume a missing form means nothing happened.

Can professional gamblers deduct 100% of losses?

No. The 90% limit applies to professionals too, and the new law folds their business expenses into the same capped bucket. The repeal bill in the House would restore 100% of losses but not the pre-2018 treatment of expenses beyond winnings.