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Two long-awaited federal tax changes reshaping how gambling activity is reported and deducted are now in force for the 2026 tax year, following the implementation of the One Big Beautiful Bill Act, signed in 2025.
The updates, one viewed as administrative relief for casinos and slot players, the other criticized as a direct tax increase on high-volume wagering, have already triggered a fresh legislative fight as lawmakers from Nevada push for a rollback.
Slot jackpots: IRS confirms $2,000 reporting trigger starting Jan. 1
The Internal Revenue Service has confirmed that the reporting threshold for slot machine jackpots that require immediate tax paperwork at the casino has increased to $2,000 for calendar year 2026, up from $1,200.
In a note, the IRS said: “For calendar years after 2025, the minimum threshold amount for reporting certain payments and backup withholding on certain information returns, including the Form W-2G, will be adjusted yearly for inflation.” It added: “The minimum threshold amount for payments made in calendar year 2026 is $2,000.”
The $1,200 trigger had been in place since 1977, making the 2026 adjustment the first major update in decades.
The bigger controversy: gambling loss deductions reduced to 90%
The more contentious change is on the deduction side. Beginning with the 2026 tax year, taxpayers who itemize can no longer offset gambling winnings with 100% of their losses up to the amount of winnings. The new rule caps deductible wagering losses at 90% of losses (still limited by total winnings), creating scenarios where someone can break even in real terms but still owes tax on a portion of their reported winnings.
Thomson Reuters summarized the policy shift as a drop from a full loss deduction to a 90% limit and reported that Nevada lawmakers have treated the change as a direct hit on taxpayers who are not actually ahead after netting wins and losses.
Sen. Catherine Cortez Masto (D-Nev.), who has led Senate efforts to restore the prior treatment, said the change means taxpayers will “literally be paying taxes on money they don’t have.”
Sen. Jacky Rosen (D-Nev.) has tied the issue to the state’s broader economy, saying the provision “will hurt Nevada’s gaming industry more broadly, which supports nearly a third of the jobs in our state,” and adding: “That industry generates billions of dollars for our local economy.”
Rollback efforts already underway, but the rule is live for 2026
The deduction reduction became a major political flashpoint in mid-2025, when Cortez Masto sought quick Senate action to reverse the new limit and was blocked. The Associated Press reported that on July 10, 2025, Cortez Masto attempted to pass legislation restoring the previous tax rule, but Sen. Todd Young (R-Ind.) objected, preventing unanimous consent and leaving the change in place for 2026.
The AP also reported Cortez Masto saying: “My understanding is many Republicans, many Democrats did not even know it was part of that process,” describing how the provision drew attention only late in the bill’s path.
The Separate House activity has focused on the FAIR BET Act, which was introduced to reinstate full loss deductibility. In December 2025 coverage, Fox 5 Las Vegas cited Rep. Dina Titus (D-Nev.) writing: “Earlier this year, the BS Budget Bill reduced the tax deduction for gambling losses to 90%. In response, I introduced the FAIR BET Act to restore the commonsense 100% tax deduction to protect professional and recreational gamblers.”
Industry groups have also pushed for action. Fox 5 Las Vegas reported the Nevada Resort Association urging movement on the FAIR BET Act, saying: “Passage of the FAIR BET Act will allow taxpayers who itemize to only be taxed on their net gains so that those who are in a losing position are not being taxed on income they have not received. We urge Congress to move expeditiously.”
Source: WLWT
