You can write off sports betting losses on your taxes, but only up to the amount of gambling winnings you report for the year, and only if you itemize deductions instead of taking the standard deduction. Starting with the 2026 tax year, a new federal rule tightens the cap further: your deduction is limited to 90% of your losses, so even a break-even bettor ends up with taxable gambling income.
How Much of Your Losses You Can Deduct
Federal law caps the gambling loss deduction at your total gambling winnings for the year.1Office of the Law Revision Counsel. 26 USC 165 – Losses Win $8,000 and lose $12,000, and you deduct $8,000. The other $4,000 is gone. You cannot carry it into next year, and you cannot use it to offset wages, investment income, or any other non-gambling income.
The 90% Cap Beginning in 2026
For tax years beginning after December 31, 2025, a provision in the One, Big, Beautiful Bill limits the deduction to 90% of your losses, still subject to the winnings cap. That changes the math for anyone whose losses are close to their winnings.
- Won $5,000, lost $7,000: 90% of losses is $6,300, but the winnings cap is $5,000. You deduct $5,000. Taxable gambling income: $0.
- Won $10,000, lost $10,000: 90% of losses is $9,000, below the $10,000 winnings cap. You deduct $9,000. Taxable gambling income: $1,000, even though you broke even.
- Won $10,000, lost $8,000: 90% of losses is $7,200. You deduct $7,200 rather than the full $8,000 the old rules would have allowed. Taxable gambling income: $2,800.
When losses vastly exceed winnings, the winnings cap kicks in first and the 90% rule doesn’t bite. When you’re roughly at breakeven, it always does.
You Have to Itemize
Casual bettors report winnings as other income on Schedule 1 of Form 1040 and can only deduct losses by itemizing on Schedule A, under “Other Itemized Deductions.”2Internal Revenue Service. Topic No. 419, Gambling Income and Losses Taking the standard deduction means no gambling loss write-off, period.
For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill Itemizing only helps if your total itemized deductions (mortgage interest, state and local taxes, charitable donations, gambling losses, and other qualifying items combined) exceed that number. For many casual bettors whose only meaningful write-off is gambling losses, itemizing produces a smaller deduction than simply taking the standard, so the loss deduction is worthless in practice.
Reporting Winnings Still Raises Your AGI
Even when you deduct every dollar the law allows, your gambling winnings go on the return in full and push up your adjusted gross income. Losses come off later, on Schedule A, and don’t reduce AGI.2Internal Revenue Service. Topic No. 419, Gambling Income and Losses A higher AGI can shrink or eliminate benefits tied to income limits, including the Earned Income Tax Credit, Child Tax Credit, premium tax credits for health insurance, and education credits.4Internal Revenue Service. AM 2008-011
Say your regular income is $45,000 and you won $15,000 and lost $15,000 betting on football. Even with a full $15,000 loss deduction on Schedule A, your AGI is $60,000 rather than $45,000. Credits worth hundreds or thousands of dollars can phase out at that higher figure. This is one of the most overlooked costs of sports betting for casual bettors.
Records You Need to Keep
The IRS expects a contemporaneous diary or log of your gambling activity, not a year-end summary put together at tax time. Each entry should include:5Internal Revenue Service. Publication 529 (12/2020), Miscellaneous Deductions
- The date and type of wager (point spread, moneyline, parlay, prop bet, and so on).
- The name and address of the sportsbook, casino, or app.
- The names of anyone with you when you placed the wager.
- The amount won or lost.
Keep the supporting paper too: betting slips, sportsbook account statements, bank and credit card records showing deposits and withdrawals, and any Form W-2G you receive. A year-end profit-and-loss report from a sportsbook app can back up your diary but doesn’t replace it. If the IRS challenges your deduction, the diary combined with transaction records is your primary defense.
Professional Gamblers Play by Different Rules
A small number of bettors qualify as professional gamblers who treat wagering as a trade or business. They report income and expenses on Schedule C, which lets them deduct ordinary business expenses (data subscriptions, travel to sporting events, computer equipment) on top of wagering losses.2Internal Revenue Service. Topic No. 419, Gambling Income and Losses Courts have held that those ordinary business expenses aren’t subject to the wagering loss cap, so a professional can potentially report a net business loss and apply it against other income. Casual bettors cannot.
The offset is self-employment tax, roughly 15.3%, on net Schedule C income. Casual gamblers don’t pay it.
Qualifying is hard. The standard from a 1987 Supreme Court case requires that you pursue gambling full-time, in good faith, with regularity, and for the production of income as a livelihood rather than as a hobby. The IRS layers on a multi-factor test looking at time commitment, track record, expertise, and financial dependence on the income. Weekend betting on a few sports seasons doesn’t clear the bar.
State Taxes Can Be Worse
Federal rules are only part of the picture. Most states with an income tax treat gambling winnings as taxable, but roughly a dozen states either don’t allow a deduction for gambling losses or apply rules that differ meaningfully from the federal approach. Some states decouple from federal treatment entirely, so you can owe state tax on gross winnings even after deducting losses federally. Check your state’s department of revenue before assuming the federal deduction carries over.