US Gambling Tax Changes In 2026 – Our Guide For Legal Changes

Discover how the US gambling tax changes in 2026 will impact your next trip to the casino or your online sportsbook account. This comprehensive guide breaks down the new 90 percent loss deduction cap, the inclusion of sports betting in the W-2G framework, and the complex dual-tax events involving cryptocurrency.

The arrival of a new year often brings shifts in federal policy, but the US gambling tax changes in 2026 represent a particularly sharp turn for bettors across the nation. Under the provisions of the One Big Beautiful Bill Act, the Internal Revenue Service has implemented a restrictive cap on loss deductions that fundamentally alters the math of wagering.

By limiting these deductions to only 90 percent of total winnings, the government has introduced the concept of taxable “phantom income” to the gambling community. This shift means that even individuals who break even on the year may still find themselves owing significant sums to the federal government. Because these rules apply to everything from sports betting to cryptocurrency gaming, every player needs to understand their new obligations. Register at any of the online casino sites in the US to play online!

The Big Beautiful Bill – US Gambling Tax Changes In 2026

Earlier last year, we reported on Trump’s bill threatening gamblers. It will now be applied to the tax system. Gamblers are now limited to a loss deduction of 90 percent. This caused massive outrage among ‘professional’ gamblers, such as WSOP champions. This amendment to the bill aims to establish a more effective reporting system for casinos and to enhance tax revenue from gamblers. The bill also seeks to modernize how casinos report data to the federal government. Lawmakers believe these changes will establish a much more efficient reporting system for venues.

By capping deductions, the Treasury Department expects to see significantly higher annual tax yields. Estimates suggest this provision could generate over one billion dollars in new federal revenue. Consequently, the IRS will likely increase its scrutiny of all individual wagering records. You must maintain perfect documentation of every bet you place during the year. Without proof, the agency may disallow even the limited 90 percent deduction you deserve. This aggressive stance marks a new era for the American gambling community. Players must now navigate a system that feels increasingly penalizing and complex. Register at bet365 Casino and play online today!

Dual-tax Event On Cryptocurrency Gambling

The US gambling tax changes in 2026 will affect many different assets. According to Koinly, from 2026, the IRS treats cryptocurrency as property, and gambling with it triggers a dual-tax event. Furthermore, the 90 percent loss deduction cap also applies to these cryptocurrency wagers. This means you cannot use all your crypto losses to offset your crypto wins. If the market crashes while you are betting, your tax situation becomes even worse. You might lose the value of your assets while still owing income tax.

This volatility adds a massive layer of risk to an already risky hobby. Therefore, digital bettors must use specialized software to track every single transaction they make. Each bet involves a price point that the IRS will want to verify. Because crypto prices change every second, manual record-keeping is almost impossible for active players. Thus, the intersection of crypto and gambling is now a major focus for federal auditors.

FAIR BET Act – US Gambling Tax Changes In 2026

The evolution of online gambling regulation needs ups and downs to happen. Thus, the FAIR BET Act seeks to reverse the gambling section of the Big Beautiful Bill. Many industry groups have officially endorsed this movement to fix the tax code. These organizations worry that high taxes will drive players toward illegal, offshore websites. If the government makes legal betting too expensive, people will find other options. This shift would result in lower tax revenue for individual states and communities.

The FAIR BET is to protect local economies. Because the bill has bipartisan support, many hope it will pass before next year. However, the political process in Washington is often slow and very unpredictable. Some lawmakers still want the extra revenue promised by the Big Beautiful Bill. They might resist any efforts to lower the tax burden on wealthy gamblers. Therefore, the next few months will be critical for the future of wagering. If the FAIR BET Act fails, the 90 percent cap will become permanent. Gamblers would then have to adapt to a much more difficult financial reality.

Sportsbetting In The W-2G Framework

Of course, the US gambling tax changes in 2026 will also define sports wagering. According to the IRS, sports betting will be included in the W-2G reporting framework. A sports wager triggers a reporting event if the winnings are at least $2000 and at least 300 times the amount of the original wager. This is called the 300-to-1 rule. In this case, if a bettor wins $2,100 on a $100 wager, despite the amount exceeding $2000, at the same time, the payout is only 21-to-1, meaning a W-2G is not required. However, if a gambler won $2,100 on a $5 long-shot parlay, then this win exceeds $2000, and the payout is 420-to-1. Thus, a W-2G must be issued. Because of these rules, sportsbooks must update their internal software systems immediately. 

They need to calculate these ratios instantly for every winning ticket they pay. This creates more work for the staff at the betting windows and kiosks. Furthermore, bettors should keep their own logs to avoid any potential reporting errors. If a sportsbook fails to issue a form, you are still legally responsible. The IRS expects you to report every dollar, regardless of the W-2G status. Therefore, the 300-to-1 rule is mostly a tool for the government’s data collection. It helps the agency identify players who are hitting massive, unlikely winning streaks. Because sports betting is growing so fast, the IRS wants a bigger piece. You must understand these thresholds to stay on the right side of the law.

Foreign Patrons – US Gambling Tax Changes In 2026

According to the RSMUS, the OBBBA’s tax changes also reach beyond U.S. borders, affecting foreign tourists who frequent American gaming hubs. Because of the phantom income generated by the 90 percent cap, more foreign patrons are expected to file U.S. tax returns (Form 1040-NR) to claim refunds for withheld taxes. Furthermore, tax treaties between the US and other nations might offer some relief. However, these treaties do not always cover the new “phantom income” rules specifically.

Foreign players must consult with international tax experts to understand their specific rights. Because the law is so new, there is still a lot of confusion. Many tourists might not even realize they owe money until they try to leave. Therefore, high-international clients require documentation. They want to ensure that guests are not blindsided by a large tax bill. Thus, the global reputation of the US gambling market is currently at stake. If the system feels too greedy, the world’s biggest gamblers will simply stay home.

Online Gambling Platforms In 2026

There are many interesting gambling laws around the world. And of course, the US Gambling tax changes in 2026 are just a phase we will go through. It is important if you gamble to keep it at a casino that can be easily contracted and trusted, while being locally legal. You should only use casinos that can be easily contacted and fully trusted. Regulated sites follow strict rules for protecting your money and your personal data. Therefore, you should avoid “gray market” sites that operate outside of the US jurisdiction. These unregulated platforms might ignore the new tax laws, but they offer no protection. If they steal your funds, you have no way to get them back.

As we move through 2026, keep a close eye on any legal updates. The FAIR BET Act or other bills could change everything in an instant. Thus, staying informed is your best defense against unexpected tax bills or penalties. Because the government wants its share, you must be a smart and diligent reporter. While gambling is fun, the IRS must be serious. Therefore, treat your wagering activities with the same care as a small business. Keep your receipts, track your wins, and always use a reputable online platform. This approach will ensure you survive the new tax era with your bankroll intact. Register at bet365 Casino to play online from the US!

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