IRS Gambling Loss Deduction Restored for 2026 Tax Year

Tax Relief Advances for American Bettors

The House Ways and Means Committee voted to advance the Digital Asset Tax Certainty Act on Wednesday, paving the way for a significant change in how gambling losses are treated on federal tax returns. Starting with the 2026 tax year, taxpayers who elect to itemize their returns will be able to deduct 100% of their gambling losses against gambling winnings.

The development represents a restoration of deduction rules that had faced restrictions in recent years. For the iGaming and sports betting industries, the change signals a potential uptick in participation as players recognize improved tax efficiency on their gambling activity.

What This Means for Players and Operators

The restoration creates a more favorable tax environment for bettors, particularly those with significant annual activity. Players will need to maintain detailed records of both winnings and losses to substantiate deductions during tax filing. This documentation requirement could drive demand for enhanced tracking tools and third-party verification services.

Operators may see this as an indirect stimulus to player activity, as the improved tax treatment reduces the net cost of losses for serious bettors. However, the rule applies only to those who itemize—standard deduction takers will not benefit from the change.

What to Watch

Observers should monitor whether the full House adopts the Digital Asset Tax Certainty Act in its current form. Additional tax policy changes could accompany this legislation as it moves through the legislative process. Compliance platforms and accounting software providers are likely to update their systems to reflect the new deduction treatment ahead of the 2026 tax filing season, which typically begins in January 2027.