The One Big Beautiful Bill Act (OBBA), signed into law on July 4, 2025, changes how gambling losses are treated for tax purposes. Starting with the 2025 tax year, taxpayers can no longer deduct the full amount of their gambling losses, even if they had enough winnings to cover them.
Before this change, the rule was simple: If you itemized your deductions, you could deduct gambling losses, but only up to the amount of your gambling winnings. For example, if someone had $9,500 in winnings and $10,000 in losses, they could deduct $9,500. This effectively canceled out the income but didn’t allow you to claim a net loss. This rule was in place under the Tax Cuts and Jobs Act (TCJA) and was scheduled to expire after 2025.
Under OBBA, the rule is more restrictive. Taxpayers can still only deduct losses up to the amount of their winnings, but now they’re limited to 90% of their total losses. Meaning, if you have $9,500 in winnings and $10,000 in losses, you can only deduct $9,000—90% of the losses. That means $500 of your winnings will now be taxable, even though your losses exceeded your winnings.
This rule applies beginning in 2026.
