How are poker tournament winnings and losses taxed in 2026?

The rule for poker players, as written

Section 165(d)(1) of the Internal Revenue Code says that for losses from wagering transactions the amount allowed as a deduction “(A) shall be equal to 90 percent of the amount of such losses during such taxable year, and (B) shall be allowed only to the extent of the gains from such transactions during such taxable year.” ^[1] The 90 percent figure was added by section 70114 of Public Law 119-21, the One Big Beautiful Bill Act, signed July 4, 2025, and it applies to taxable years beginning after December 31, 2025. ^[1] So a 2026 poker player deducts 90 percent of tournament losses, and never more than total gambling winnings. For tax year 2025, the return most players file in early 2026, the deduction is still 100 percent of losses, capped at winnings. ^[1]

A tournament cash is a wagering gain; a buy-in in a tournament you did not cash is a wagering loss. IRS Topic 419 says “You must report all gambling winnings on Form 1040 or Form 1040-SR (use Schedule 1 (Form 1040))” and “You may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040).” ^[3] Schedule 1 line 8b is labelled “Gambling” ^[15], and the Schedule A instructions put losses on line 16, other itemized deductions, “only to the extent of gambling winnings reported on Schedule 1 (Form 1040), line 8b.” ^[5] Publication 529 closes the shortcut poker players reach for first: “You can't reduce your gambling winnings by your gambling losses and report the difference.” ^[4]

Put together, for 2026: cashes go on Schedule 1 in full; losing buy-ins go on Schedule A at 90 percent, up to the cashes, and only if you itemize; the 10 percent that does not count is gone, because the statute measures losses and gains within one taxable year, so nothing carries forward, carries back or offsets wages. ^[1] The 90% cap page tracks the rule itself; this page works it through for tournaments.

2025 vs 2026 for a tournament player

Loss rule from section 165(d) as amended ^[1]; reporting lines from Topic 419, the Form 1040 instructions and the Schedule A instructions ^{[3] [15] [5]}; professional expenses from section 165(d)(2) ^[1]; W-2G figures from the Instructions for Forms W-2G and 5754, revised January 2021 and January 2026. ^{[11] [2]}

Worked example A: a break-even tournament year

If you cash for $80,000 net of buy-ins across 2026 and spend $80,000 on buy-ins in tournaments where you did not cash, you deduct $72,000 and pay tax on $8,000 you never kept. At a 24 percent marginal rate that is $1,920 of federal income tax on a year that was a wash. On a 2025 return the same player deducts the full $80,000 and the taxable figure is $0.

The $8,000 is phantom income (income that appears on the return although the player ended the year with no gain). It exists only because of the 90 percent figure, and it lands on the player whose losses run closest to his wins, which describes most tournament regulars. The phantom income guide runs more cases.

Worked example B: a winning year, and when the cap does not bite

If you cash for $150,000 and lose $100,000 in buy-ins in 2026, you deduct $90,000 instead of $100,000, so taxable gambling income is $60,000 instead of $50,000, and the extra $10,000 costs $2,400 at a 24 percent marginal rate. If instead you cash for $80,000 and lose $120,000, 90 percent of losses is $108,000, the cap at winnings cuts that to $80,000, and the result is $0 taxable in both years: the 90 percent only changes the answer when 90 percent of losses is less than winnings.

Our arithmetic, applying section 165(d) to round numbers. ^[1] All three players must itemize for any of the loss figures to count; a player who takes the standard deduction reports the cashes and deducts $0. The deduction page covers the itemize-or-not arithmetic, and the poker calculator runs your own totals.

When does a poker tournament cash trigger a W-2G?

The Instructions for Forms W-2G and 5754, revised January 2026, tell the cardroom: “File Form W-2G for each person to whom you pay gambling winnings meeting or exceeding the applicable reporting threshold, reduced by the amount of the wager or buy-in, from each poker tournament you have sponsored. Winnings and losses of the participant from other poker tournaments you have sponsored during the year aren't taken into account.” ^[2] Three things follow. The test is net of the buy-in. It is applied one tournament at a time, so ten small cashes at the same room are never added together. And your losing buy-ins in other events do not reduce it, or appear on any form: the W-2G has boxes for reportable winnings, the date, the type of wager, withholding and the payer's identification, and no box for losses. ^[2]

The number is where most pages are out of date. The January 2021 instructions said to file “for each person to whom you pay more than $5,000 in winnings, reduced by the amount of the wager or buy-in, from each poker tournament.” ^[11] The January 2026 instructions no longer print a $5,000 poker figure; they refer to the “applicable reporting threshold” and say in What's New that “The minimum threshold amount for payments made in calendar year 2026 is $2,000.” ^[2] Publication 1099 for 2026 returns lists Form W-2G for winnings from “poker tournaments, etc.” at “Generally, $2,000 or more,” adjusted for inflation each year. ^[10] Our reading, and the one on our thresholds page, is that a 2026 tournament cash of $2,000 or more net of the buy-in gets a W-2G. A cash of more than $5,000 net certainly does, under either reading.

Withholding works differently for poker than for a lottery or a sportsbook. The instructions say that when the cardroom files the W-2G, “regular gambling withholding doesn't apply to the winnings. However, if the person who wins more than the applicable reporting threshold doesn't provide a TIN, you must apply backup withholding to the full amount of the winnings from the tournament at the backup withholding rate of 24%.” ^[2] Give the cage your Social Security number and nothing is withheld; refuse and 24 percent of the whole prize, not the net, goes to the IRS. Either way the form does not decide what you owe: cashes below the threshold, cash-game wins and online results are all reportable income with no form at all. ^[3]

What counts as a tournament loss?

Your loss in a tournament is what you paid to play in it and did not get back: the buy-in and fee, each re-entry, and any add-on or rebuy, in an event where you finished out of the money. A satellite you win is not a cash; the seat it pays is the buy-in of the target event, and if you brick that event the whole chain is a loss. Cash-game sessions are wagering transactions too, and their wins and losses combine with tournament results in the two totals the return asks for. What you cannot count as a loss on Schedule A is anything that is not a wager: travel, hotels, coaching and software are personal expenses for a recreational player. ^[4]

The unit of measurement is the session (the span of play over which a gain or loss is measured, rather than each individual bet). IRS Chief Counsel Advice AM 2008-011 measures a casual gambler's gain or loss when the player cashes out, not hand by hand ^[6], and the Tax Court accepted the same method in Shollenberger v. Commissioner, T.C. Memo. 2009-306, where a couple who hit a $2,000 jackpot and then lost $400 the same day were taxed on the day's net gain rather than the $2,000 the casino reported. ^[7] There is no published IRS session rule for poker. Practitioners treat one tournament entry as one session: the buy-in is the stake, the prize or the bust is the cash-out, and the net of the two is that tournament's gain or loss. That is also how the W-2G instructions test the payment, net of the buy-in, one tournament at a time. ^[2] The session method page covers the boundary, and the session log template has a row for every entry.

Two figures matter on the return and they are not the ones on your forms. Winnings are the sum of your sessions with a gain, so a $6,000 prize on a $1,500 buy-in is a $4,500 gain, not $6,000. Losses are the sum of your sessions with a loss, including every bricked buy-in that produced no paperwork anywhere. The W-2G total on your IRS transcript is neither figure; the reconciliation page explains how the three are tied together.

Recreational or professional: Schedule A or Schedule C?

A recreational player reports cashes on Schedule 1, line 8b, and losses on Schedule A, line 16, and gets no deduction at all without itemizing. ^{[3] [5]} A professional reports gross winnings as business income on Schedule C and takes losses and business expenses there, with no need to itemize, but pays self-employment tax on the profit. The line between them is the Supreme Court's test in Commissioner v. Groetzinger, 480 U.S. 23 (1987): “if one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby, it is a trade or business.” ^[8] A weekend player with a job is not a professional because a Schedule C would be cheaper; a full-time grinder is not a recreational player because a Schedule A would be.

The 90 percent rule reaches professionals through section 165(d)(2): “the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.” ^[1] The Joint Committee on Taxation reads that to mean the limit “applies not only to the direct outlays for losing wagers but also to other expenses incurred in connection with gambling activity (for instance, the otherwise deductible costs of travel to and from a casino for taxpayers for whom gambling is a trade or business).” ^[14] For a poker professional, flights to the series, hotel nights, coaching, solvers and tournament fees are all inside the 90 percent and the cap. The expense-folding language itself dates from the 2017 tax law, which applied it to taxable years beginning after December 31, 2017 and before January 1, 2026; the 2025 law kept it and removed the sunset. ^[1] So for 2025 a professional's losses and expenses together were capped at winnings at 100 percent; for 2026 the same combined figure counts at 90 percent.

If a professional wins $200,000 in 2026, loses $150,000 in buy-ins and cash games, and spends $30,000 on travel and coaching, the combined “losses from wagering transactions” are $180,000, 90 percent is $162,000, and Schedule C profit is $38,000 against an economic profit of $20,000. Under the 2025 rule the same player deducted the full $180,000 and reported $20,000. The extra $18,000 is 10 percent of the combined figure.

Self-employment tax is 12.4 percent for Social Security plus 2.9 percent for Medicare, 15.3 percent in total, owed once net earnings from self-employment reach $400. ^[9] Net Schedule C profit is net earnings from self-employment, and the statute does not carve the disallowed 10 percent out of it, so a professional's phantom income is taxed twice: as income and as self-employment income. The professional gambler page and the professional gambler calculator run the full computation.

Staking, swaps and backers: who reports the cash?

Most deep runs are not one person's money. The tax forms have a mechanism for that. The W-2G instructions say: “Use Form 5754, Statement by Person(s) Receiving Gambling Winnings, to prepare Form W-2G only when the person receiving gambling winnings subject to reporting or withholding isn't the actual winner or is a member of a group of two or more people sharing the winnings.” ^[2] The player who collects the prize lists each person entitled to a share on Form 5754 and gives it to the cardroom, which then issues a W-2G to each recipient for that recipient's share instead of one form to the collector for the whole prize. ^[2]

Without a Form 5754 the whole prize is reported under the collector's name and the IRS expects to find it on the collector's return. A backer's share paid out afterward is then the collector's problem to document, and a private staking agreement is not a W-2G. Keep the agreement, the payment records and the backer's share of the buy-ins, because a backer who funded half the buy-ins and takes half the cash has half the wins and half the losses, and each side's return should show its own half. Swaps between players work the same way in principle: the percentage swapped is a share of the other player's result. How a particular arrangement is characterised is a question for your preparer; the point here is that the form exists and the cage will process it at the time of payment, not months later.

The 2026 WSOP Main Event final table: what the winners kept

The nine finalists of the 2026 World Series of Poker Main Event shared $30,250,000 and owe an estimated $12,273,963 in tax, 40.58 percent of the prize money, according to the annual analysis by Russ Fox, EA, published August 6, 2026. ^[12] The winner, Lucas Jumalon of Spokane, Washington, takes home an estimated $6,009,174 of his $10,000,000. ^[12] Fox excludes staking from the figures because backers' shares are rarely made public. ^[12]

Figures from Taxable Talk, August 6, 2026; estimates, before any staking. ^[12] The percentages we quote below are our division of Fox's figures.

The spread in the table is state tax. Jumalon in Washington and Han Feng in Texas, two states with no personal income tax, keep about 60 percent of their prizes; Jamie Shaevel of Santa Monica, California keeps under half, with an estimated 50.37 percent going to tax; Michael Gagliano of New Jersey is taxed at about 48.4 percent. ^[12] Fox's analysis is about the prize itself and does not address the 90 percent rule. The connection is ours: a Main Event cash is one very large winning session in a year that, for most players who reach it, also contains dozens of losing buy-ins across the series, and for 2026 only 90 percent of those buy-ins offset the cash. A grinder with $200,000 in series buy-ins that did not cash loses $20,000 of deduction to the rule, which at the top federal rate is real money on top of the figures in the table.

State taxes on tournament cashes

Nevada, where most of the series is played, has no personal income tax, so a Las Vegas cash carries no Nevada tax. ^[16] It is still taxable in your home state if that state taxes income, and states differ on losses: some start from federal taxable income and inherit the 90 percent deduction, some allow no gambling loss deduction at all, and a few have their own netting rules. The state-by-state page has the table, and the Nevada, California and New Jersey pages cover the three states in the WSOP table.

What records does a tournament player need?

Topic 419: “To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses.” ^[3] Publication 529 lists what the diary shows: the date and type of each wager, the name and location of the establishment, the names of other people present, and the amounts won or lost. ^[4] For tournaments that means, per entry: the date, the venue or site, the event and buy-in, re-entries and add-ons, the finish, and the prize. Keep the buy-in receipt, the payout ticket or cashier receipt, every W-2G and, for online play, the site's tournament history export. Losses without records are not deductible at any percentage, and in 2026 even documented losses count at 90 percent.

A cardroom win/loss statement helps but rarely covers tournaments completely, and it is the operator's estimate rather than your record; the win/loss statement page explains where it falls short. W2GMatch reads your W-2Gs, statements and session log together and shows where the three disagree before the IRS does.

Where repeal stands (checked September 28, 2026)

On September 16, 2026 the House Ways and Means Committee voted 38-5 to advance H.R. 10357, the Digital Asset Tax Certainty Act introduced by Rep. Jason Smith, which carries language removing the 90 percent limit and restoring the full deduction for tax year 2026. ^[13] The Joint Committee on Taxation describes the proposal as eliminating “the 90-percent limitation, enacted by Public Law 119-21,” so that for taxable years beginning after December 31, 2025 wagering losses “are allowed as a deduction to the full extent of the gains,” and puts the revenue cost at about $2 billion over ten years. ^{[14] [13]} The language descends from the FAIR BET Act, H.R. 4304, introduced by Rep. Dina Titus, and the FULL HOUSE Act introduced in the House by Reps. Steven Horsford and Max Miller in January 2026.

Nothing is enacted. The House is not scheduled to return until after the November 2026 midterm elections, so there is no floor vote before then; the Senate has not acted; and the President has not signed anything. ^[13] Until a repeal becomes law, 90 percent is the rule for 2026 returns, and a player who plans the year on the full deduction is betting on Congress. The repeal status page is updated when the status changes.

What to do before December 31, 2026

1. Log every tournament entry now, with the Publication 529 items, and total two figures as you go: cashes net of buy-in, and buy-ins in events not cashed. ^[4]
2. Collect the W-2Gs and the cardroom or site statements, and reconcile them to the log rather than filing from the forms. The forms show gross prizes and no losses.
3. If you sold action, get Form 5754 completed at the cage when the prize is paid, and keep the staking agreement with the return. ^[2]
4. Run the itemize-or-not arithmetic with your filing status. If 90 percent of your losses plus other itemized deductions will not beat the standard deduction, plan for tax on 100 percent of your cashes.
5. Check the repeal status before filing the 2026 return in 2027. If H.R. 10357 or a successor is enacted as written, the full deduction returns for 2026; until then, plan on 90 percent.

Related questions

Sources

1. 26 U.S.C. § 165(d), Wagering losses, as amended by Pub. L. 119-21 § 70114 (Legal Information Institute), amendment effective for taxable years beginning after December 31, 2025
2. IRS Instructions for Forms W-2G and 5754, Rev. January 2026
3. IRS Tax Topic 419, Gambling income and losses, page last reviewed June 11, 2026
4. IRS Publication 529, Miscellaneous Deductions, Gambling losses up to the amount of gambling winnings, Rev. December 2020
5. IRS Instructions for Schedule A (Form 1040), line 16, Other itemized deductions, tax year 2025 edition
6. IRS Office of Chief Counsel, AM 2008-011, Reporting of wagering gains and losses, December 12, 2008
7. Journal of Accountancy, Tax Court accepts IRS method for determining gambling wins and losses, December 2009 (secondary source)
8. Commissioner v. Groetzinger, 480 U.S. 23 (Legal Information Institute), decided February 24, 1987
9. IRS Tax Topic 554, Self-employment tax, page last reviewed September 24, 2026
10. IRS Publication 1099 (2026), General Instructions for Certain Information Returns, Guide to Information Returns, Form W-2G row, for use in preparing 2026 returns
11. IRS Instructions for Forms W-2G and 5754 (Rev. January 2021), Poker Tournaments, the last revision before the 2026 change, Rev. January 2021
12. Taxable Talk (Russ Fox, EA), The real winners of the World Series of Poker 2026, August 6, 2026 (secondary source)
13. Covers, House committee advances repeal of 90 percent gambling loss deduction limit, September 16, 2026 (secondary source)
14. Joint Committee on Taxation, Description of H.R. 10357, the Digital Asset Tax Certainty Act (JCX-47-26), Title VII, Reinstatement of rules for wagering losses, September 14, 2026
15. IRS Instructions for Form 1040 and 1040-SR, Schedule 1, line 8b, Gambling, tax year 2025 edition
16. Nevada Constitution, Article 10, Section 1(9) (FindLaw), read September 6, 2026

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