Starting with tax years that begin in 2026, gambling losses are deductible at 90 cents on the dollar. The missing dime means a gambler who breaks even for the year, winning exactly as much as he loses, still ends up owing federal income tax.
Through 2025 the rule was even. Old IRC §165(d) said wagering losses "shall be allowed only to the extent of the gains from such transactions." Losses offset winnings dollar for dollar, the deduction could never exceed the winnings, and a break-even year added nothing to your taxable income.
The July 2025 tax law changed the arithmetic. Section 70114 of Public Law 119-21 (the One Big Beautiful Bill Act, signed July 4, 2025) rewrote §165(d) so that, for tax years beginning after December 31, 2025, the deduction for wagering losses "shall be equal to 90 percent of the amount of such losses," still capped at gains.
Run a break-even year through the new text. You win $50,000 and lose $50,000. The deduction is 90% of $50,000, or $45,000, which sits under the $50,000 cap, so $45,000 is all you get. The remaining $5,000 of winnings is taxable income in a year where you took home nothing. A break-even gambler now pays federal tax on 10% of his winnings.
Winnings were fully taxable before 2026 and still are; what the law trimmed is the loss deduction. Because the trim is a percentage of losses rather than of profit, the extra tax scales with how much you bet, and the biggest hit lands on high-volume bettors who grind out roughly even years.
Who can deduct at all hasn't changed. For a recreational gambler, wagering losses are an itemized deduction on Schedule A, so a filer who takes the standard deduction reports every dollar of winnings and deducts no losses, exactly as before. Professionals get no exit either: amended §165(d)(2) treats any otherwise-allowable deduction incurred in carrying on a wagering transaction as a wagering loss, which pulls a professional gambler's business expenses inside the same 90-percent, capped-at-gains limit.
A repeal effort exists. H.R. 4304, the FAIR Bet Act, introduced July 7, 2025, would restore the full deduction by striking "90 percent" and inserting "100 percent"; as of this writing it has been introduced, not enacted, and the 90-percent rule is current law for 2026.
For Florida readers the scope question is easy: this is federal law, and Florida has no personal income tax, so the federal answer is the whole answer. The harder change is recordkeeping. Your tax now turns on gross winnings minus 90% of the losses you can document, never more than your winnings. You have to report the winnings whether or not you kept track of anything; the losses only count if you can show them, and that deduction is the only thing standing between your gross winnings and your tax bill.
A break-even year at the tables is no longer break-even on your return. Starting with 2026, the code counts only 90 cents of every dollar you lost, and in an even year the missing dimes come back as taxable income.