How 2026 Tax Law Changes Affect Your Super Bowl Winnings and Losses

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Every year, the Super Bowl becomes the biggest night for sports betting in the United States. Billions of legal wagers are placed across states and platforms. And this year is no different.

The American Gaming Association estimates that more than $1.76 billion will be legally wagered on this year's NFL championship, where the Seattle Seahawks face the New England Patriots. That figure has continued to grow as more states have legalized sports betting and embraced online betting platforms.

“No single event brings fans together like the Super Bowl, and this record figure shows just how much Americans enjoy sports betting as part of the experience,” Bill Miller, AGA President and CEO, stated in a release about the big game.

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But for 2026, the Super Bowl arrives alongside notable changes to how gambling winnings and losses are taxed, which could impact tax bills for fans who just break even on the big game. Here's more to know.

Gambling winnings still count as taxable income

Under long-standing IRS tax rules, all gambling winnings, including sports bets, are taxable as ordinary income at the federal level.

Yes, if you win on a Super Bowl bet through a legal sportsbook (like DraftKings, FanDuel, BetMGM, etc.), those winnings must be reported on your federal income tax return.
For larger wins — typically over $600 — the sportsbook will issue a Form W-2G reporting your gambling income, and may even withhold taxes at the time of your payout.

State income taxes may also apply if you live in (or place the bet in) a state that taxes personal income. So your total tax bill is impacted by both federal and state obligations.

Gambling loss deduction change in 2025 Trump tax bill

One key change from the 2025 federal tax overhaul (informally known as President Donald Trump's "big beautiful bill") is this: For 2026, you can now deduct at most 90% of your gambling losses against winnings on your federal return, instead of the historical 100%.

This may sound minor, but it can create what tax experts call “phantom income” — taxable income that doesn’t reflect actual net gambling gains.

Under the old rule (which applies to the 2025 tax returns you're filing now in tax season 2026), if you won $10,000 over the year but also lost $10,000, your net would be zero, so no tax on your gambling winnings.
Under the new 2026 gambling loss limit, you could only deduct $9,000 of your losses against that $10,000. That essentially means $1,000 of theoretical income becomes taxable, even though you didn’t profit overall.

That extra taxable income is subject to your ordinary federal income tax rates, which range from 10 % to 37 % federally, depending on income level.

This change takes effect for tax year 2026 and beyond, meaning bettors who file their 2026 return in spring 2027 will feel the full effects.

Note: Though, as Kiplinger has reported, some lawmakers and industry leaders are looking to reverse the new gambling winnings rule. So, stay tuned.

Itemizing deductions still matters

Remember that gambling losses are deductible only if you itemize deductions on your tax return (using Schedule A).

But…most U.S. taxpayers take the standard deduction, which is higher than ever before but means no deduction for gambling losses. So, as mentioned, if you don't itemize, every dollar you win counts as taxable income regardless of losses.

State gambling tax changes

In addition to federal changes, some state and local governments are adjusting how they tax sports betting revenue. For example:

Last year, Maryland raised its sports betting tax rates on operators. Some argue this could shrink profit margins and potentially influence odds or promotions
As of January 1, 2026, Illinois has layered surcharges and progressive tax brackets on sportsbook revenue, and Chicago is enacting a city-level tax on betting revenue.
Colorado is phasing out and will eventually eliminate its tax deductions for "free bets," meaning operators will pay more tax on gross gaming revenue over time.
Several other states like Wyoming, Ohio, and North Carolina, have considered tax increases or structural changes to sports betting taxes.

Higher tax rates on operators are sometimes passed through to bettors in the form of reduced payout percentages, fewer free-to-play credits, or steeper early cash-out fees.

Super Bowl 2026 bet strategy: Plan ahead for taxes

With the Super Bowl here and billions of dollars on the line in wagers, the hype and excitement are real, but so are the tax implications:

Know your obligation: Even small winnings are taxable; your friendly sportsbook issuing or not issuing a tax form doesn’t change your duty to report.
Track wins and losses meticulously: If you itemize, good record-keeping is key to maximizing your deductible losses — capped at 90 % for gambling losses as of 2026.
Anticipate “phantom income”: This year, it’s possible to owe tax even without a net profit.
Watch for law changes: Local and state legislatures are actively revising sports betting tax codes, and the Trump administration could look to reverse the gambling loss limits enacted in its 2025 tax bill.

How much gambling winnings are taxable: Bottom Line

Unless Congress acts, new federal tax changes might reduce how much of your losses you can write off next tax season, which could affect your tax bill if you’re a big winner or even a breakeven bettor.

When layered with evolving state and local tax rules, your tax return next year could be as dramatic as this year's game.

Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.