What is a Wagering loss deduction?

A wagering loss deduction is a federal itemized deduction that allows taxpayers to offset gambling winnings with gambling losses and related expenses, subject to specific limitations. Under the One Big Beautiful Bill Act, the deduction is permanently capped at 90% of total gambling winnings for tax years beginning after December 31, 2025. This cap applies to both recreational and professional gamblers, ensuring that at least 10% of gambling winnings remain taxable. Qualifying losses include casino games, sports betting, poker tournaments, lottery tickets, and horse racing, as well as gambling-related travel and business expenses. Taxpayers must maintain detailed documentation, including daily gambling logs, Form W-2G statements, and expense receipts, to support deduction claims. Strategic coordination with Traditional 401k contributions can help offset increased tax liability from the modified cap.

Related Terms

What are Itemized Deductions?

What is Adjusted gross income (AGI)?

What is Gross Income?

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Tax loss harvesting

Transform investment losses into strategic tax advantages and optimize your portfolio's performance with AI-driven precision.

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Child traditional IRA

Open a Traditional IRA for children with earned income. Contribute up to $7,000 annually with full deduction, giving them decades to grow tax-free.

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Employee achievement awards

Award your team for service milestones and safety achievements while maximizing allowable deductions up to $1,600 per employee.

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Health reimbursement

Set aside money on a pre-tax basis to pay for qualified medical expenses to maximize tax savings opportunities.

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Child & dependent tax credits

Claim up to $2,000 per child & $500 per other dependent. Automatically maximize your child and dependent-related tax credits.

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Health savings account

Set aside money on a pre-tax basis to pay for qualified medical expenses to maximize tax savings opportunities.

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Sell your home

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Employee achievement

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Work opportunity tax credit

Unlock tax savings for empowering your community through hiring.

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Oil & gas deduction

Drill into tax savings. Maximize deductions for both tangible and intangible drilling costs.

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Hiring kids

Reduce taxable income & self-employment tax by hiring your kids.

Home office

Deduct qualified expenses for using your home for business purposes.

Meal expenses

Business can typically deduct 50% of meals associated with doing business with some cases allowing up to 100% deduction.

Travel expenses

Businesses can deduct necessary travel expenses, like airfare and lodging, directly related to operations for tax savings.

Vehicle expenses

Vehicle tax deduction allows deduction of business vehicle expenses, using a per-mile rate or actual costs, from taxable income.

Late S election

A Late S Election lets a corporation request IRS S corp status post-deadline.

Late C election

A Late C Election is a request to the IRS for C corporation status after the deadline.

Depreciation

Put your fixed assets to work for you by utilizing depreciation to find and compare tax savings in minutes.

R&D tax credit

Fuel your venture's growth and innovation with the R&D tax credit. Not just for tech firms or big corporations.

Clean vehicle

Businesses and Individuals can receive a tax credit for purchasing new eco-friendly vehicles. Individuals may also qualify on used eco-friendly vehicles.

Residential clean energy

Taxpayers who invest in renewable energy improvements for their home or second home may qualify for a credit to lower their income tax.

Augusta rule

The Augusta Rule lets homeowners rent their property tax-free for up to 14 days a year without reporting the income.

Roth 401k

Roth 401(k) lets employees and individuals make after-tax retirement contributions, offering tax-free growth and withdrawals.

Traditional 401k

Traditional 401(k) plans offer pre-tax retirement savings for employees, with companies reducing taxable income via contributions.