NASHVILLE, Tenn. (WTVF) — A new provision, deep within the Congressional Spending Plan, could have a big impact on those who love to bet on sports or gamble at casinos.
The provision would eliminate deductible percentages of gambling losses. What does that mean?
Let's say you had a hot hand and won about $100,000, but over the course of the same year, you lost the same amount of money — effectively breaking even. Under the current tax code, you wouldn't owe any taxes since you technically didn't earn any new money. You could deduct 100% of that loss from your tax return.
Under the new tax code, you can only deduct 90% of your gambling losses.
The difference between 100% and 90% deductions doesn't sound like a big change until you consider the $100,000 scenario. In that case, you would owe taxes on $10,000 of that loss. How much tax you paid would depend on your tax bracket.
A previous version of this story said someone would owe $10,000 in taxes, instead of owing taxes on the $10,000 portion. We regret the error and appreciate the viewers that reached out to let us know.
It's important to note — this doesn't go into effect until fiscal year 2026 and would be relevant when you file your taxes in 2027.
This also only impacts you if you decide, for whatever reason, not to take the standard deduction on your taxes and itemize each deduction instead.
Industry experts seem to think it will majorly impact amateur players who bet big and professional gamblers and sports betters whose livelihood depends on their winnings.
Phil Galfond, a professional poker player, has posted about this extensively on X.
"There are a group of players that are no longer going to be able to make it as pros, and there are certainly going to be some break-even players or losing players that have a worse experience because they owe tax on money they didn’t earn," Galfond told his followers.
At the end of the day, it's your money, and it's up to you on how to spend it. But before you bet big, know it could end up costing you in the end.
A Las Vegas tax expert posted a blog about the things gamblers should know if this moves forward. You can read it here.
As you might expect, members of Congress where gambling is a big deal, are already working to try to change this provision.
If there are any updates, we'll be sure to let you know.
Do you have more information about this story? You can email me at Chris.Davis@NewsChannel5.com.
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