US Gamblers Face New Tax Hit as Effort to Repeal Deduction Cap is Blocked

• A legislative effort in the US to repeal a new cap on the tax deductibility of gambling losses has been blocked by the House Rules Committee.
• The FAIR BET Act, championed by Nevada Representative Dina Titus, sought to restore the ability for players to deduct 100% of their losses against their winnings.
• A recent budget bill signed into law by President Trump controversially reduced this deduction to 90%, meaning a player who breaks even for the year could still face a tax bill.
• Titus attempted to attach her repeal bill as an amendment to a major defence spending bill, but the Republican-controlled committee did not allow the measure to proceed to a vote.
• The new 90% cap is set to take effect in 2026 and is projected to raise an additional $1.1 billion in federal tax revenue over eight years.

A bipartisan effort in the United States Congress to reverse a significant and controversial new tax on gambling winnings has suffered a major setback. This week, the powerful House Rules Committee blocked a proposal from Nevada Democrat Dina Titus that would have restored the full, 100% tax deductibility of gambling losses.

Titus had attempted to attach her bill, the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET) Act, as an amendment to the National Defense Authorization Act (NDAA). The committee’s rejection of the amendment means the new, less favourable tax treatment for gamblers is set to remain in place. “This was an easy fix that should have been adopted,” Titus posted on social media. “Nonetheless, I will continue to build support to restore the 100% gambling loss deduction.”

The 90% Deduction Cap Explained

The change at the heart of the dispute is a subtle but significant alteration to the US tax code. For years, American gamblers have been able to deduct 100% of their annual losses up to the total amount of their annual winnings. However, a provision included in President Donald Trump’s most recent budget bill reduced this deduction to just 90%.

The practical impact is that a player can now owe a significant amount of tax even if they break even or have a net loss for the year. For example, a player with $100,000 in winnings and $100,000 in losses could previously report a net income of $0 from gambling. Under the new law, they can only deduct $90,000 of their losses, leaving them with a taxable income of $10,000.

A Controversial and ‘Stealthy’ Inclusion

The way the new tax rule became law has been a source of significant controversy. The provision was reportedly added late in the process by the Senate Finance Committee. After the budget was passed, two senior Republican senators who sit on that committee, Chuck Grassley and John Cornyn, told reporters they weren’t even aware the deduction change had been included in the final bill.

This has led to criticism that a stealth tax hike, projected to generate $1.1 billion for the Treasury over the next eight years, was passed without proper debate or scrutiny. While Titus’s latest effort has failed, other bipartisan bills with the same goal have also been introduced in both the House and the Senate, indicating that the fight to repeal the new cap will continue as its 2026 implementation date draws closer.