Starting in tax year 2026, the 2025 federal tax bill changed two rules that directly affect totals bettors. First, the across-the-board W-2G reporting threshold rises to $2,000. Second, gambling losses — already limited to itemized deductions — are now capped at 90% of winnings. A bettor who wins $10,000 and loses $10,000 can deduct at most $9,000. The old dollar-for-dollar offset is gone. For a full picture of how winnings are reported and withheld, see Taxes on Over Under Winnings: W-2G Thresholds and Federal Rules for 2026.
How does the 90% cap actually work for totals bettors?
The IRS still requires itemizing on Schedule A to claim any gambling loss deduction. The 90% cap simply adds a second ceiling on top of the existing "losses cannot exceed winnings" rule. Example: $5,000 in winnings, $4,000 in losses. The 90% ceiling is $4,500, so all $4,000 in losses are deductible — the cap does not bite here. Flip it: $5,000 in winnings, $6,000 in losses. Old rule allowed $5,000; new rule allows only $4,500. The cap matters most to bettors who run close to the break-even line with high volume. Bettors who take the standard deduction get nothing regardless of how many losing tickets they hold.
Who does the 90% cap hurt most versus least?
| Bettor profile | Impact of 90% cap |
|---|---|
| High-volume, near-breakeven itemizer | Highest impact — loses meaningful deduction dollars |
| Net winner who itemizes | Moderate — cap only bites if losses approach winnings |
| Recreational bettor taking standard deduction | No change — losses were never deductible anyway |
| Net loser with large winnings and larger losses | Direct hit — the 10% floor is permanently non-deductible |
What records must totals bettors keep for the IRS?
The IRS expects documentation that can substantiate both sides of the ledger. Required supporting records include wagering tickets, bank withdrawal slips, canceled checks, and all W-2G forms received. Sportsbook account statements work as a supplement but are not a substitute for the above. Keep records organized by tax year. A claim with no documentation is a claim that will not survive audit. For guidance on which licensed platforms issue W-2Gs correctly, see Licensed US Sportsbooks for Over Under Bets: Verified Operators by State.
Are sportsbook bonuses part of the loss-deduction calculation?
Yes, and this catches bettors off guard. Cash bonuses received from a sportsbook count as net earnings for federal tax purposes under the operator's net-earnings formula. That means bonus cash inflates your reported winnings figure, which in turn determines the ceiling on your deductible losses. Bettors who treat welcome offers as "free money" often discover a higher-than-expected gross income figure on their W-2G or annual statement. Legality of bonuses varies by state; confirm availability in your jurisdiction before assuming any offer applies to you.
Does state law change any of these rules?
Federal rules govern the deduction cap and W-2G thresholds. State income tax treatment of gambling losses is a separate question. Some states conform to federal itemized deduction rules; others do not allow gambling loss deductions at all. Bettors must check their specific state's tax code. See Where Is Over Under Betting Legal? State-by-State Status in 2026 for a current breakdown of which states permit legal wagering, since you can only generate deductible losses in a state where you are betting legally. For the broader legal and tax framework, Legal Over Under Betting in the US: State Laws and Tax Rules covers the full regulatory picture.
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