To claim losing lottery tickets on your taxes, you have to itemize deductions on Schedule A, cap the write-off at 90% of your documented losses, and keep that total at or below your reported gambling winnings for the year. All three conditions have to be true at once. Miss any one and the deduction doesn’t work.
The Core Rule for 2026
Gambling losses, including losing lottery tickets, are deductible only as an itemized deduction on Schedule A, under “Other Itemized Deductions.”1Internal Revenue Service. Topic No. 419, Gambling Income and Losses Three limits apply:
- You must itemize. If you take the standard deduction, your losing tickets give you nothing.
- Only 90% of your wagering losses are deductible for tax years beginning in 2026, under a change made by the One, Big, Beautiful Bill Act.
- The deduction can’t exceed your total gambling winnings for the year. It can bring taxable gambling income down, but it can’t create a net loss or offset wages, interest, or other income.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses
The practical effect of the 90% rule: if you win $5,000 and have $5,000 in losing tickets, you deduct $4,500, not $5,000. That leaves $500 of winnings taxable even though you broke even in real life. In the 22% bracket, that is $110 in tax you would not have owed under the pre-2026 rules.
How It Lands on Your Return
Your winnings and your losses sit in two different places on the return. Every dollar of lottery winnings goes on Schedule 1 of Form 1040 as gambling income, which rolls up into your total income.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses You report every win, not just the ones a casino or lottery commission reported to you on a Form W-2G.
Your losses, up to the 90% cap and the winnings ceiling, go on Schedule A. They do not reduce your adjusted gross income; they only reduce your taxable income if itemizing beats the standard deduction overall.
Is Itemizing Even Worth It?
This is the question that stops most casual lottery players from benefiting. 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.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill Itemizing only helps when your total itemized deductions clear that number.
A single filer with $2,000 of winnings and $2,000 of losing tickets can technically deduct $1,800. But giving up a $16,100 standard deduction to claim $1,800 in gambling losses, with little else to itemize, raises the tax bill rather than lowering it. The loss deduction is useful mainly when you were already going to itemize for mortgage interest, state and local taxes, or charitable giving.
A Worked Example
Say you are a single filer in 2026 who won $8,000 on the lottery, spent $8,000 on losing tickets over the year, paid $11,000 in state and local taxes, and paid $4,000 in mortgage interest. Your allowable loss deduction is $7,200 (90% of $8,000). Total itemized deductions come to $22,200, which beats the $16,100 standard deduction. You still owe tax on $800 of your winnings, since the 10% haircut applies, but itemizing saves you more than it costs.
Flip the facts and remove the mortgage interest and state taxes, and the same $7,200 loss deduction is worthless because the standard deduction is higher.
What the IRS Expects You to Keep
The deduction is only as good as the records behind it. The IRS requires records created at the time of the gambling activity, not reconstructed later when you are preparing your return.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses If you get audited, the burden is on you to prove each loss. An envelope of undated tickets will not carry you through.
The Losing Tickets Themselves
The cleanest proof is the physical ticket. Keep them, organized by date and game. For draw games like Powerball or Mega Millions, the printed ticket already shows the date, draw number, and the retailer where you bought it. Scratch-off stubs can be grouped in a labeled envelope for each month. If you throw tickets away as you go, you are relying on a diary alone.
A Gambling Diary
A contemporaneous log is the backbone of a loss deduction. At minimum, record for each purchase the date, the type of game, the location where you bought the ticket, and the amount you spent.3Internal Revenue Service. Diary or Similar Record A spreadsheet updated the day of purchase works. A list typed up in April from memory does not.
Supporting Records
Bank statements, debit card records, and ATM withdrawal receipts from lottery retailers back up the amounts in your diary.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses A credit card charge at a convenience store does not prove on its own that the money went to lottery tickets, so these records are a complement to the diary and the tickets, not a substitute.
Shared Tickets and Office Pools
If you won on a pooled ticket, you can only deduct losses against your own share of the winnings. The person who cashes the prize fills out Form 5754, which lists each winner’s name, address, taxpayer identification number, and share, and the lottery commission then issues a separate W-2G to each person based on that split.4Internal Revenue Service. Instructions for Forms W-2G and 5754 Each pool member reports their own share as winnings and applies the same 90% loss rule to their own losing tickets. A written pool agreement showing contributions and split protects everyone’s return if the IRS asks later.
Where the Deduction Does Not Apply
Two situations commonly misread the rule above:
Non-resident aliens. U.S.-source lottery winnings get reported on Form 1040-NR, and in most cases, you cannot deduct gambling losses against them. Canadian residents are the main exception, under a tax treaty.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses Everyone else pays U.S. tax on the full winnings with no offset.
State returns. The federal rules do not automatically carry over. Most states that tax lottery income follow the federal approach and allow a loss deduction up to winnings, but a few require tax on the full prize with no deduction for losing tickets. If the winning ticket was bought in a state other than where you live, both states may want a cut, usually with a credit for taxes paid to the other. Check the rules for both before assuming your federal deduction solves the state side too.
Putting It Together
Before you count on writing off losing tickets, run three quick checks. Do your other itemized deductions get you anywhere near the standard deduction for your filing status? Did you keep tickets or a dated log through the year? Did you have reported winnings to deduct against in the first place? If the answer to all three is yes, apply the 90% rule, enter the result on Schedule A, and keep the records with your tax file. If any answer is no, the losing tickets stay what they already were.