New for the 2026 tax year
2026 Phantom Gambling Tax Calculator
Broke even this year? Starting in 2026 you can only deduct 90% of your gambling losses. Enter your totals to see what the same bets cost you in 2025 versus 2026.
Your 2026 numbers
2025 rule (100% of losses)
$0
Taxable: $0
2026 rule (90% cap)
$1,100
Taxable: $5,000
Your actual result was $0, but you'd be taxed on $5,000. That's $5,000 of phantom income and about $1,100 more tax than under the 2025 rule.
Estimate only, using your marginal federal rate plus an estimated top state rate. Some states don't allow gambling losses. Not tax advice.
Filing cheatsheet: where these numbers go
| Item | Form | Your amount |
|---|---|---|
| Gambling winnings | Schedule 1 (Form 1040), other income | $50,000 |
| Deductible losses (90% cap) | Schedule A, other itemized deductions | $45,000 |
| Tax withheld on W-2G | Form 1040, federal tax withheld | From your forms |
Line numbers can change each year — check the current IRS instructions or your tax software's prompts.
How to legally lower phantom income
The cap hits gross losses. If you log play as sessions and report each session's net result, your gross winnings and gross losses both shrink — so the 10% that stays taxable shrinks too. That only holds up with clean, dated records.
Frequently asked questions
What is phantom gambling income?
Starting with the 2026 tax year, only 90% of gambling losses are deductible, still capped at your winnings. If you won and lost the same amount, 10% of your losses stays taxable even though you made no money. That leftover amount is often called phantom income.
Does the 90% cap apply if I take the standard deduction?
Gambling losses are only deductible if you itemize on Schedule A. If you take the standard deduction, all of your reported winnings are taxable no matter how much you lost, in 2025 and in 2026.
Where do these numbers go on my tax return?
Gambling winnings are reported on Schedule 1 (Form 1040) as other income. Deductible losses are claimed on Schedule A under other itemized deductions. Any tax withheld on a W-2G is entered as federal tax withheld. Check the current form instructions or a tax professional for your exact situation.
Can the IRS session method reduce phantom income?
Recording play as sessions means you report the net result of each session instead of every single bet. That usually lowers both gross winnings and gross losses, which shrinks the 10% of losses that the cap leaves taxable. Good contemporaneous records are required.
Is this calculator tax advice?
No. It is an estimate using your marginal federal rate and an estimated top state rate. Some states do not allow gambling losses at all, and your real bill depends on your full return. Confirm with a tax professional.