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Free calculator · Tax year 2026

Can you owe tax on gambling if you lost money?

You can owe federal tax on gambling even in a year you lost money. Winnings are taxable in full, while losses are only deductible if you itemize — and from tax year 2026 only 90% of them are. A casual bettor who wins $5,000 and loses $5,000 usually deducts nothing at all and is taxed on the whole $5,000.

Losses you can deduct$0
Losses you cannot deduct$5,000
Income you are taxed on but never kept$5,000
Extra tax because of this$1,100

You get no deduction at all here. Wagering losses are itemized, and at this size your losses are worth less than the standard deduction — so you are taxed on the full $5,000 of winnings, not 10% of it. This hits casual bettors hardest.

Estimate for tax year 2026, federal only, using the same calculation engine as the Spaife app. It does not model every situation — state tax, professional-gambler treatment under §162, and other deductions can change the result.

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Common questions

Can I owe tax if I broke even or lost money betting?
Yes, and it is common. Winnings are taxable in full, but losses are an itemized deduction — so if your losses are worth less than the standard deduction you deduct nothing and are taxed on all of your winnings. If you do itemize, only 90% of losses are deductible from 2026, so breaking even still leaves 10% taxable.
Can I deduct all my gambling losses in 2026?
No. The One Big Beautiful Bill Act (Pub. L. 119-21, §70114) amended §165(d) so that from 2026 only 90% of wagering losses are deductible, and only up to your winnings. The other 10% is not deductible at all.
What if I take the standard deduction?
Then you deduct nothing. Wagering losses are an itemized deduction, so a casual bettor whose losses are smaller than the standard deduction is taxed on the full amount of their winnings, not 10% of it.
Does this apply to sports betting and daily fantasy?
The rule applies to wagering losses generally, which includes sports betting, casino play and other wagering transactions. Winnings are reportable whether or not you receive a Form W-2G.

Sources

  • 26 U.S.C. §165(d) — wagering losses.
  • One Big Beautiful Bill Act, Pub. L. 119-21, §70114 — the 90% limitation, effective for tax years beginning after 31 Dec 2025.
  • 26 U.S.C. §63 — itemized vs. standard deduction.
  • IRS Publication 529 — miscellaneous deductions, gambling losses.

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