Sponsors (9)
The bill tightens and clarifies tax treatment of wagering losses and related expenses—improving tax fairness and deduction certainty for the system overall while raising taxes and compliance burdens for some gamblers and wagering businesses.
Non-gambling taxpayers and overall tax fairness: the bill prevents people from using wagering losses to shelter non-wagering income by limiting loss offsets to actual wagering gains, reducing opportunities for tax avoidance.
Taxpayers who run wagering-related activities and the IRS: the bill clarifies that business expenses incurred in carrying on wagering are treated as wagering losses, providing clearer guidance and greater certainty about how those deductions are handled.
Taxpayers who deduct expenses related to wagering activities (e.g., travel, advertising): will likely face higher taxable income because those deductions are limited to the extent of wagering gains.
IRS and taxpayers: the change may increase compliance and enforcement burdens because the IRS must determine which deductions are 'incurred in carrying on' wagering and apply the gains-limited rule, likely producing more audit disputes and administrative complexity.
Based on analysis of 2 sections of legislative text.
Limits wagering-loss deductions to the amount of wagering gains and treats deductions incurred in carrying on wagering as wagering losses.
Official title: Amend the Internal Revenue Code of 1986 to reinstate the rules for wagering losses.
Introduced July 9, 2025 by Catherine Marie Cortez Masto · Last progress July 9, 2025
Reinstates a long-standing tax rule that limits deductions for wagering losses to the amount of gains from wagering transactions and clarifies that “losses from wagering transactions” include any otherwise-allowable deductions incurred in carrying on wagering activities. The change amends the Internal Revenue Code and applies to taxable years beginning after December 31, 2025.