The IRS has confirmed raising the gambling income reporting threshold for 2026 and released a draft form, too. The big changes related to gambling taxes were introduced in the One Big Beautiful Bill. Taxpayers and casinos can learn about the changes to the gambling taxes here.
The IRS requires taxpayers to report gambling winnings as income on their tax returns. Under gambling taxes, the payer must issue the Form W-2G if you win over a certain threshold or withhold taxes when you win over a certain amount.
People who indulge in gambling, slots, or any type of gambling, or provide gambling services, should know about the changing tax laws. The government has passed the legislation, and it will be implemented in 2026 for gambling income.
What is the new Jackpot reporting threshold for 2026?
The new laws have increased the Jackpot reporting threshold for the calendar year 2025, making things easier for payers. The IRS clarifies all the information about the newly drafted form. According to the new rules, the minimum threshold for jackpot reporting will be $2000.
Earlier, the payers will have to report the income up to $1,200 through Form W-2G to the IRS and the winner. This is the first time the jackpot reporting has been changed since 1977, offering relief to the casinos and operators.
According to the draft, the reporting threshold will now be adjusted based on inflation every year. The draft mentioned the change in reporting in the revision under January 2026; hence, it will be implemented for the gambling income earned from 01 January 2026.
How will this affect the gamblers and payers?
The increased jackpot reporting threshold from $1200 to $2000 starting in 2026 will affect the gamblers and payers in the following way:
- The paperwork for the casinos and operators will be reduced as the reporting threshold is increased.
- The slot machine would not need to pause machines for the income reporting until it reaches the threshold.
- With the change in threshold, the Form W-2G instructions will be changed; hence, the IRS has drafted the revised form.
- The reporting threshold change does not mean it makes the winning tax-free; the winning remains taxable, even if no Form W-2G is issued.
Have the Withholding rules also changed for the gambling tax?
With the change in the Jackport reporting threshold, many are wondering if the withholding rate has also changed. The new bill brought changes to the gambling industry reporting threshold and gambling deduction, but the withholding rate remains the same.
The withholding rate for the gambling winnings is of two types: (i) regular gambling threshold at 24%, (ii) backup withholding at the same 24%. As per the IRS tax provisions, the withholding for the gambling winnings is applicable when you win $5000 or more from certain parimutuel pools, sweepstakes, wagering pools, sports wagering, jai alai, or lotteries.
The backup withholding has the same rate that applies to the winners who couldn’t have the Taxpayer Identification Number (ITIN) at a 24% rate.
What’s the current status of the IRS Form W-2G?
The IRS has issued the draft form of W-2G based on the changes to alert users about the changes. The final revision of the form is not confirmed yet, as the form still needs the Office of Management and Budget (OMB) approval.
IRS has posted the DRFAT forms to share information and alert the users about the changes, but the final form will be posted on the official IRS website of the latest forms at https://www.irs.gov/forms-instructions-and-publications.
What is the change to the gambling deduction for 2026?
The OBBBA bill also changes the gambling deduction for the 2026 tax year, which will change many things for gamblers. The IRS allows the taxpayer deduction on gambling losses, and this new legislation can change many things for the taxpayers.
According to the new legislation, the deduction for the gambling loss is 90% of winnings for taxpayers who depend on itemized deductions. Under the old rule, the taxpayers got a 100% deduction of the gambling loss.
Suppose your gambling loss for the tax year is $100,000, then you will be allowed to have the gambling deduction of $90,000 under the new law. Remember, this will affect the gamblers who claimed the itemized deductions on their tax returns and the casino industry.
The gambling tax laws are undergoing a major change with the jackpot reporting threshold and gambling deduction for the 2026 tax year. People involved in gambling should keep an eye on the changes and be prepared for the tax laws changes.
Disclaimer: Information about changes to gambling taxes is for general awareness only. Official tax laws and rules are determined by government authorities.