House Panel Backs Restoring Full Gambling Loss Deduction for 2026

Congress took a notable step this week toward reversing a tax change that many poker players and other gamblers say created taxable income without real economic profit. On September 16, 2026, a House committee approved legislation by a 38-5 vote that would restore the full deduction for gambling losses, with the change proposed to apply retroactively to January 1, 2026, according to SpadePoker.

The issue centers on a 2025 tax-law change that reduced the amount of provable gambling losses that can be deducted from 100% to 90% of winnings beginning in 2026. Critics have labeled the result a “phantom tax” because some players can owe federal income tax even in a year when their net gambling result is zero.

What Changed

SpadePoker reported that the current problem traces to the One Big Beautiful Bill Act, signed in July 2025. Under prior rules, a taxpayer generally could deduct gambling losses up to the amount of gambling winnings. Beginning January 1, 2026, however, the new rule reduced that offset to 90% of winnings.

Lawmakers have spent more than a year trying to reverse that result. SpadePoker said three separate bills were introduced: the FAIR BET Act, the WAGER Act and the FULL HOUSE Act. In mid-September 2026, language restoring the full deduction was folded into a broader measure, the Digital Asset Tax Certainty Act, H.R. 10357.

The committee approval does not change tax filings yet. The measure still must move through the House Rules Committee, pass the House floor, pass the Senate and be signed by the president before it becomes law.

Who Is Affected

The immediate impact falls on taxpayers with gambling winnings and matching or near-matching losses in the same year. That can include professional poker players, recreational tournament players and other gamblers who maintain records showing both wins and losses.

For households with high adjusted gross income, the issue matters because federal tax can be imposed on gross winnings that were economically offset by losing sessions, tournament buy-ins or other documented losses. Nevada lawmakers have been especially visible in the debate. SpadePoker said Representative Dina Titus warned that the rule could push activity toward offshore or unregulated platforms, while Representative Steven Horsford supported restoring the deduction on fairness grounds.

The proposal appears especially relevant for taxpayers who cycle large dollar amounts through play during the year. A player may have substantial winnings reported for tax purposes while ending the year with little or no net profit after losses.

The After-Tax Math

The practical problem is easiest to see with simple arithmetic.

Example: a poker player has $100,000 of gambling winnings during 2026 and $100,000 of documented losses from buy-ins and play over the same period.

• Under the prior 100% rule, the player could offset the full $100,000 of winnings with $100,000 of losses.
• Taxable gambling income: $0.
• Under the current 90% cap for 2026, the player could deduct only $90,000.
• Taxable gambling income: $10,000.

That $10,000 is the so-called phantom income: taxable income created even though the player broke even for the year.

If Congress ultimately restores the 100% deduction retroactive to January 1, 2026, taxpayers who filed under the capped rule may be able to amend returns and seek refunds, as SpadePoker noted. That outcome is not final because the bill has not yet completed the legislative process.

Moves to Discuss With Your Advisor

Until the law is actually changed, taxpayers still need to work with the rules in force for 2026. Households affected by gambling income may want to keep especially thorough records of wins, losses, buy-ins, receipts and tournament statements. If Congress later makes the fix retroactive, that documentation could matter for any amended return.

For affluent households, the tax impact may also spill into estimated payments, cash flow and year-end planning. The core point is not to assume the committee vote alone changes federal tax liability. It does not. The proposal may eventually reduce 2026 taxable income, but only if it is enacted.

Taxpayers in this situation often discuss two questions with a CPA: how to document gambling activity for the current year, and what records would be needed if an amended return becomes available later.

What to Watch Next

The next procedural step is consideration by the House Rules Committee, followed by a House floor vote that SpadePoker said is expected after the November midterm elections. After that, the measure would still need Senate approval and the president’s signature.

The key unresolved issue is timing. Congress has advanced the fix in committee, but full enactment remains uncertain. For now, the main significance of this week’s vote is that a bipartisan committee majority endorsed reversing a tax change that, in some cases, taxes winnings without recognizing the full amount of documented losses.

After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.