How are gambling winnings taxed in the US? The IRS text, the 2026 thresholds and the 90% loss rule
How are gambling winnings taxed in the US?
The IRS treats gambling winnings as fully taxable income at ordinary rates, 10% to 37% for 2026. Form W-2G reporting for slots, bingo and keno now starts at $2,000. From tax year 2026, section 165(d) as amended in 2025 lets players deduct only 90% of losses, and only against winnings.
Piece published Reviewed by CryptoGuardz Register Desk, editorial desk
Gambling winnings in the US are taxed as ordinary income, at the same federal rates as wages: 10% to 37% for 2026. The IRS puts it in one line: "Gambling winnings are fully taxable and you must report the income on your tax return." From tax year 2026, Form W-2G reporting for slots, bingo and keno starts at US$2,000, and losses are deductible at only 90%.
That last change comes from the federal budget law enacted in July 2025, Public Law 119-21. It means a player who wins and loses the same amount in 2026 can owe tax on money they never kept. This page is a reading of the IRS and statutory texts, not tax advice.
How are gambling winnings taxed?
As income, in full, whether or not anyone reports them. IRS Topic 419, read on 9 October 2026, sets the scope:
Gambling income includes but isn't limited to winnings from lotteries, raffles, sports betting, horse races, and casinos.
Winnings go on Form 1040 or 1040-SR, and the topic page says that includes winnings not shown on a Form W-2G. The form is a reporting document for the payer. The obligation to report sits with the player either way.
Losses are a separate entry, not a subtraction from the winnings. The IRS says "You may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040)" and "The amount of losses you deduct can't be more than the amount of gambling income you reported on your return." Publication 529 adds that a player cannot net losses against winnings and report only the difference. The deduction side is covered in detail in can you deduct gambling losses.
How much are gambling winnings taxed?
At the player's marginal rate, because winnings are added to other income. There is no separate gambling rate at federal level. For tax year 2026, IRS release IR-2025-103 gives the bands' two ends:
| Federal figure, tax year 2026 | Amount | Source |
|---|---|---|
| Lowest rate | 10%, single income of US$12,400 or less | IR-2025-103 |
| Top rate | 37%, single income over US$640,600 | IR-2025-103 |
| Standard deduction, single | US$16,100 | IR-2025-103 |
| Standard deduction, married filing jointly | US$32,200 | IR-2025-103 |
| Regular gambling withholding | 24% on certain winnings of US$5,000 or more | W-2G instructions |
| Backup withholding | 24% where no correct TIN is given | W-2G instructions |
The 24% withholding is a prepayment, not the final tax. The W-2G instructions apply it to winnings of US$5,000 or more "from sweepstakes, wagering pools, certain parimutuel pools, jai alai, lotteries, and sports wagering". A player in the 32% or 35% band owes the difference at filing. A player in a lower band gets part of it back. State income tax comes on top in most states and is not covered here: not measured.
When does a casino issue a Form W-2G?
When a payout meets the reporting threshold for its game type. The January 2026 revision of the W-2G instructions changes the dollar figure:
The minimum threshold amount for payments made in calendar year 2026 is $2,000.
The Treasury's proposed rules of April 2026 spell out what moved. The preamble describes the old rules as a US$1,200 threshold for bingo and slot machines and "a $1,500 reporting threshold for winnings from keno", and states that "the threshold for reporting payments of winnings from bingo, keno, and slot machine play is $2,000 for calendar year 2026", with inflation adjustment after that.
| Game | Before 2026 | Payments made in 2026 |
|---|---|---|
| Slot machines | US$1,200 | US$2,000 |
| Bingo | US$1,200 | US$2,000 |
| Keno | US$1,500, after the wager | US$2,000, after the wager |
| Other wagers | Applicable threshold and at least 300 times the wager | Applicable threshold and at least 300 times the wager |
For poker tournaments the instructions refer to "the applicable reporting threshold, reduced by the amount of the wager or buy-in" without printing the dollar figure on the page read: not verified.
What changed in the 2025 tax law for gambling losses?
Section 70114 of Public Law 119-21 rewrote section 165(d) of the Internal Revenue Code. The old text was one sentence: losses from wagering transactions "shall be allowed only to the extent of the gains from such transactions." The new paragraph (1), as published in the US Code, says the deduction for any taxable year:
(A) shall be equal to 90 percent of the amount of such losses during such taxable year, and (B) shall be allowed only to the extent of the gains from such transactions during such taxable year.
Section 70114(b) makes it apply "to taxable years beginning after December 31, 2025", so from the 2026 tax year, filed in 2027. Paragraph (2) brings professional gamblers' expenses inside the same cap: "losses from wagering transactions" includes "any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction."
The IRS and Treasury proposed matching regulations, REG-113229-25, for publication on 17 April 2026. Proposed section 1.165-10 allows a deduction "for 90 percent of the amount of such losses during the taxable year" and applies the same limits to spouses filing jointly on their combined figures. A search on 9 October 2026 found no final version: not verified.
What it does to a player who itemizes, by arithmetic on the statute:
| Winnings reported | Losses | Deduction allowed for 2026 | Taxable gambling income |
|---|---|---|---|
| US$10,000 | US$4,000 | US$3,600 | US$6,400 |
| US$10,000 | US$10,000 | US$9,000 | US$1,000 |
| US$100,000 | US$100,000 | US$90,000 | US$10,000 |
| US$100,000 | US$130,000 | US$100,000 | US$0 |
The third row is the one that matters. A player who broke even on US$100,000 of winnings owes tax on US$10,000 of income they did not keep. The order of operations decides it: the statute takes 90% of losses first, then caps the result at gains. In the last row 90% of US$130,000 is US$117,000, which the cap cuts to US$100,000, so nothing is left to tax. The 10% haircut bites whenever losses are less than about 111% of winnings, which covers break-even years and small net losses.
Are crypto casino winnings taxed differently?
No separate rule exists for them in the IRS pages read. The IRS digital assets page says "For U.S. tax purposes, digital assets are considered property, not currency" and "Income from digital assets is taxable." Its virtual currency FAQs, which the page notes generally cover transactions before 1 January 2025, say income received in virtual currency is measured at "the fair market value of the virtual currency, in U.S. dollars, when received", and that the US dollar value then becomes the player's basis.
Read together with Topic 419, a crypto win is gambling income at its dollar value when credited, and selling or spending the coins later is a second, separate event with its own gain or loss. The IRS pages read do not address casino winnings in crypto by name: not verified beyond the general rule.
Offshore crypto casinos do not issue Form W-2G. That changes nothing about the income, since Topic 419 requires reporting of winnings not on a W-2G. It also leaves the player with no third-party record. Of the 24 operators in the CryptoGuardz register, 21 list the United States as a restricted territory in their terms; one, Jackbit, does not, and two have no verified list. Playing at the 21 breaches their terms, with the consequences set out in no-KYC casinos and US players and on the VPN clause watch.
How can you legally reduce tax on gambling winnings?
Only through the deduction the statute allows, backed by records. What the IRS texts permit and what they rule out:
| Step | Allowed? | Basis |
|---|---|---|
| Itemize and deduct losses up to winnings | Yes, at 90% from 2026 | 26 U.S.C. 165(d); Topic 419 |
| Deduct losses without itemizing | No | Topic 419 |
| Report only net winnings | No | Publication 529 |
| Leave out winnings with no W-2G | No | Topic 419 |
| Deduct losses beyond winnings | No | 26 U.S.C. 165(d)(1)(B) |
| Keep a diary of every session | Required to deduct | Topic 419; Publication 529 |
The diary requirement is specific. Topic 419 says "you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses." Publication 529 lists what each entry should carry: the date and type of wager, the name and address or location of the establishment, the names of others present, and the amounts won or lost. Topic 419 also says that most nonresident aliens who are not residents of Canada cannot deduct gambling losses at all.
Splitting a payout to stay under the W-2G threshold does not change the tax due; the threshold governs the payer's paperwork, not the player's income. Anything beyond the steps in the table is a question for a tax professional, not for a casino forum.
What this does not show
State income tax on gambling winnings is not measured. The gambling section of IRS Publication 525 could not be read in two attempts, so nothing here relies on it. The text of section 70114 was read through the US Code as published by Cornell LII, because the enrolled law served by Congress.gov and GovInfo truncated before that section in two attempts. Whether the proposed regulations have been finalised is not verified. The poker tournament threshold is not verified.
Quick answers
How are gambling winnings taxed in the US?
As ordinary income at 10% to 37% for 2026, reported in full on Form 1040 whether or not a W-2G is issued. See the US pages for state-level legal status.
How much tax do you pay on gambling winnings?
Your marginal federal rate, between 10% and 37% for 2026. Withholding of 24% applies to certain payouts of US$5,000 or more, but that is a prepayment, not the final figure.
What is the W-2G threshold in 2026?
US$2,000 for slots, bingo and keno, per the January 2026 W-2G instructions and the April 2026 proposed rules. It was US$1,200 for slots and bingo and US$1,500 for keno before.
Can you avoid taxes on gambling winnings?
Not legally, beyond itemizing losses. From 2026 only 90% of losses count, capped at winnings. The loss deduction guide covers the records the IRS asks for.
Where can I get help with gambling in the US?
The National Problem Gambling Helpline is 1-800-MY-RESET, by call or text, with online chat on the NCPG site. More options are on the responsible gambling page.
Sources
- IRS Topic no. 419, Gambling income and losses, retrieved 9 October 2026
- IRS Instructions for Forms W-2G and 5754, revised January 2026, retrieved 9 October 2026
- IRS, IR-2025-103, tax inflation adjustments for tax year 2026, 9 October 2025, retrieved 9 October 2026
- 26 U.S.C. 165(d) as amended by Pub. L. 119-21, section 70114, via Cornell LII, retrieved 9 October 2026
- Pub. L. 119-21, table of contents listing section 70114, retrieved 9 October 2026
- IRS and Treasury, REG-113229-25, notice of proposed rulemaking, FR Doc. 2026-07519, for publication 17 April 2026, retrieved 9 October 2026
- IRS Publication 529, Miscellaneous Deductions, revised December 2020, retrieved 9 October 2026
- IRS, Digital assets, retrieved 9 October 2026
- IRS, Frequently asked questions on virtual currency transactions, retrieved 9 October 2026
- National Council on Problem Gambling, help and treatment, retrieved 9 October 2026
- CryptoGuardz casino register, restricted countries per operator, retrieved 2 September to 2 October 2026
About this piece
Compiled by the CryptoGuardz register team from the sources listed above. Research and drafting are AI-assisted and reviewed by a named editor before publication. Nothing here is a recommendation to gamble. If a figure or a reading is wrong, tell us and the correction is logged in public.