The IRS officially confirms that starting January 1, 2026, the reporting threshold for casino gambling jackpots will increase from $1,200 to $2,000, marking the first major adjustment to this rule since 1977. The new regulation also introduces an annual inflation adjustment mechanism, and details on related tax policies can be found on the PASA official website.
New Regulation Core: Threshold Doubled + Inflation Linkage, Ending Fifty Years of Old Rules
This is a rule that hasn't changed in nearly fifty years! Previously, casino gambling jackpots like slot machines only needed to reach $1,200 for the casino to submit a W-2G report form to the IRS. The new rule directly raises this threshold to $2,000. More importantly, the future reporting threshold will be automatically adjusted each year based on inflation, completely solving the problem of frequent reporting of low-value prizes due to long-term inflation. The new rule still requires procedural approval from the Office of Management and Budget at the White House, and it is expected to pass smoothly.
Industry Impact: Reduced Burden for Operators, Less Disturbance for Players
For casinos, the higher threshold will significantly reduce the volume of low-value prize reports, easing administrative burdens and software upgrade costs. However, in the short term, some slot machines may still lock at the $1,200 threshold, but will no longer trigger the reporting process. For players, winning small no longer interrupts the betting process frequently, nor does it require handling cumbersome tax documents for small prizes, significantly enhancing the experience. However, this may also affect the tip income of slot machine attendants, and some casinos may adjust their staffing structure.
Tax Controversy Heats Up: Limited Loss Deductions Spark Industry Backlash
Simultaneously with the implementation of the new rule, another tax adjustment has sparked heated debate. Starting in 2026, when deducting losses item by item, gamblers can only deduct up to 90% of their winnings, whereas previously they could deduct 100%. The industry warns this could lead to "phantom income"—players may need to pay taxes even if they break even over the year. The CEO of DraftKings bluntly states "taxing non-actual income makes no sense," and bipartisan lawmakers have also voiced opposition. A Nevada state legislator has proposed a bill to restore full deductions, but it has not yet entered the voting stage. Additionally, President Trump has also hinted at possibly revisiting the taxation policy on gambling winnings, sparking market expectations for federal gambling tax reform.
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This article is from "PASA-Global iGaming Leader," a gambling industry news channel:https://t.me/pasa_news
Original in-depth gambling channel:https://t.me/gamblingdeep
Free data reports: @pasa_research
PASA Matrix: @pasa002_bot
PASA official website: https://www.pasa.news
