The tax environment of 2026 has truly made a groundbreaking change to all individuals in terms of sports betting, casual, and even professional poker players. The regulations of the game have been altered under the One Big Beautiful Bill Act (OBBBA), and not to the advantage of the player.

The conventional tax code has been operating under a simple netting logic: make a gain of 10,000 and suffer a loss of 10,000, and you have a zero taxable income. However, this year during this tax period, the IRS has been using a new mathematical obstacle that can build you up with a tax statement in cases where you have neither made a profit nor a loss.

Can you still deduct 100% of your gambling losses in 2026?

No. Section 165(d) is the most disruption change made in the OBBBA. Beginning January 1, 2026, you can only claim a loss of 90% of your gambling losses. The IRS payroll audit can sometimes increase the losses, and hence an expert is required in such situations.

This 10 percent "haircut" is even in situations where you may make more than you lose in IRS terms, that other 10 percent is considered as Phantom Income. For example, if you win $100,000 at the track but have $100,000 in losing tickets, you can only deduct $90,000. Although you did not make a profit, now you have to declare that you made a taxable income of $10,000.

Do you need to itemize to claim these deductions?

Yes. Losses in gambling are also an itemized deduction that is to be reported under Schedule A. This is one of the traps of the law of critical importance in 2026: by taking the Standard Deduction (15,750 in the case of a single person), you cannot deduct a single dollar of your losses.

Since the OBBBA made the standard deduction bigger, fewer taxpayers will be interested in itemizing. It implies that 100% of the income acquired by many casual gamblers as a result of gambling will be taxed as regular income, with 0% of the losses and winnings being deductible.

During this tax year, you will be asked to painstakingly determine whether your expenses, following a 90 percent restriction on all your gambling losses in this tax year combined with all your other expenses, exceed the standard deduction limit.

What is a 'Gambling Session' and can it help your tax bill?

To overcome the 90% rule, tax lawyers are resorting more often to a 90% rule avoiding technique known as the Gambling Session. In the past, the IRS and other courts have recognized that a taxpayer cannot access wealth until the session is terminated.

When playing on a slot, and you play for four hours, the amount of money that comes out at the end of these four hours is your winning, not each winning pull. This means that, by summing up the wins and losses on a session-by-session basis, then, technically, scaling the 90% annual limit, you can minimize the income produced by the OBBBA in phantom.

Are travel and lodging expenses included in the 90% cap?

Yes. The OBBBA has fixed the broadened meaning of the definition of losses on wagering transactions. This includes all "ordinary and necessary" expenses related to gambling, such as:

·         Tournament entry fees.

·         Travel to and from the casino.

·         Hotel and meal expenses while on a gambling trip.

They remain deductible to individuals who itemize, but they are now subject to the same 90% deduction, and remain subject to the overall amount of your winnings. Travel costs cannot be incorporated to draw a tax loss that can counterbalance your wages or other income you earned in the business. The sales tax attorney can help in lodging a complaint if any unfair charges are found.

Conclusion

The OBBBA has made it a house win situation for the IRS regarding the 2026 tax session. The government has capped loss deductions to 90 percent by doing so, which has, in effect, created a tax on the unrealized gains where the bettors have to pay to break even. Such a transition has made hard-working record-keeping more of a defensive need than ever before.