Gambling winnings in retirement: how they tax your Social Security, raise Medicare IRMAA, and what the 2026 90% loss cap adds
Gambling winnings count in full toward a retiree's adjusted gross income; losses never reduce it. That raises the figure that makes up to 85 percent of Social Security taxable (over $34,000 single, $44,000 joint) and the MAGI behind Medicare IRMAA two years later ($109,000 single, $218,000 joint for 2026). For tax years beginning after December 31, 2025, only 90 percent of losses are deductible under 26 U.S.C. 165(d), so a break-even 2026 year still adds taxable income.[6][10][1]
Last reviewed 2026-09-28 against the sources listed at the end. Written by the W2gMatch team; not yet signed off by a named reviewer.
Your own numbers: the W2gMatch phantom-income calculator shows the 2025, 2026 and 2027 taxable gambling income for any winnings and losses; the sections below show what that gross figure does to your benefits and premiums.
Why do gambling losses never lower AGI, MAGI or combined income?
Gambling losses are an itemized deduction; they reduce taxable income but never adjusted gross income, so they cannot lower the MAGI that sets Medicare IRMAA or the combined income that taxes Social Security. IRS Topic 419 says you must report all gambling winnings on Form 1040 or 1040-SR using Schedule 1, and that you may deduct gambling losses only if you itemize your deductions on Schedule A, never more than the gambling income you reported.[2] Winnings therefore land on line 8b of Schedule 1 and flow into AGI; losses come off later, on Schedule A, after every AGI-based test has already been run.
For Medicare, 20 CFR 418.1010 defines modified adjusted gross income as your adjusted gross income as defined by the Internal Revenue Code plus certain tax-exempt income, starting with tax-exempt interest.[13] Itemized deductions are not in that definition. For Social Security, Publication 915 compares your base amount with one-half of your benefits plus all your other income, including tax-exempt interest; gambling winnings are “other income” and gambling losses are not subtracted.[6] This asymmetry, not the 90 percent cap, causes most of the damage to a retiree who broke even. It was true in 2025 with 100 percent of losses deductible and it is true in 2026 with 90 percent.
Can a break-even gambling year make my Social Security taxable?
Yes. A retiree with $24,000 in Social Security who wins and loses $50,000 in 2026 reports $5,000 of phantom income and sees $20,400 of benefits become taxable. Publication 915 sets a base amount of $25,000 for a single filer ($32,000 married filing jointly, $0 married filing separately if you lived with your spouse at any time during the year); when one-half of your benefits plus all your other income exceeds $34,000 ($44,000 joint), up to 85 percent of benefits can be taxable.[6][7]
Without gambling, that retiree's comparison figure is $12,000 (half of $24,000), below the $25,000 base, so no benefits are taxed. Add $50,000 of gross winnings and the figure is $62,000, well past $34,000, so 85 percent of the benefits, $20,400, is taxable. Losing the $50,000 back changes nothing here, because losses are subtracted on Schedule A, not from other income. The 90 percent cap then adds its own layer: an itemizer deducts $45,000 of the $50,000 and pays tax on $5,000 of gambling income on top of the newly taxable benefits.[1]
| Scenario | Winnings in AGI | Deductible losses | Taxable gambling income | Combined income | Taxable benefits |
|---|---|---|---|---|---|
| No gambling | $0 | $0 | $0 | $12,000 | $0 |
| 2025 return, itemizes (100% of losses) | $50,000 | $50,000 | $0 | $62,000 | $20,400 |
| 2026 return, itemizes (90% of losses) | $50,000 | $45,000 | $5,000 | $62,000 | $20,400 |
| 2026 return, standard deduction | $50,000 | $0 | $50,000 | $62,000 | $20,400 |
The exact taxable-benefit figure comes from the Publication 915 worksheet; 85 percent is the ceiling, and at $62,000 of combined income the worksheet reaches it. Our phantom income guide has the 90 percent arithmetic for other winning and losing combinations.
How much can gambling winnings raise my Medicare premiums?
Medicare sets your income-related monthly adjustment amount from the modified adjusted gross income the IRS provides for the tax year two years before the premium year (20 CFR 418.1135(a)); when that year is not yet available it uses the year three years prior until it is.[12] So the 2024 return sets 2026 premiums, and gambling in 2026 sets Medicare premiums for 2028. IRMAA is a cliff, not a slope: one dollar over a tier reprices every month of that year.
For 2026 the standard Part B premium is $202.90 a month and the Part B deductible is $283.[11][10] A single filer with $95,000 of MAGI who also won $55,000 in 2024 shows $150,000 on the 2024 return, which lands in the second tier: Part B is $405.80 a month instead of $202.90 and Part D carries a $37.50 monthly adjustment, so 2026 costs about $2,885 more than the standard premium ($202.90 plus $37.50, times twelve). Whether the $55,000 was lost back is irrelevant to Medicare.[10]
The cliff is just as sharp at the low end. A single filer at $108,500 of MAGI who won $1,200 at bingo is at $109,700, over the $109,000 line: Part B becomes $284.10 a month, $81.20 more for twelve months, or $974.40 for the year, plus $14.50 a month on Part D, $174 for the year. A $1,200 win cost $1,148.40 in premiums two years later.[10]
| Individual return | Joint return | Part B per month | Part D adjustment per month |
|---|---|---|---|
| $109,000 or less | $218,000 or less | $202.90 | $0.00 |
| over $109,000 to $137,000 | over $218,000 to $274,000 | $284.10 | $14.50 |
| over $137,000 to $171,000 | over $274,000 to $342,000 | $405.80 | $37.50 |
| over $171,000 to $205,000 | over $342,000 to $410,000 | $527.50 | $60.40 |
| over $205,000 and under $500,000 | over $410,000 and under $750,000 | $649.20 | $83.30 |
| $500,000 or more | $750,000 or more | $689.90 | $91.00 |
The brackets for 2028, the first premium year that will look at 2026 gambling, have not been published; the dollar lines are adjusted each year, so treat the 2026 table as the shape of the cliff, not the exact 2028 boundary.
Can I appeal IRMAA because I lost the money back?
No. Social Security will make a new determination only for a major life-changing event, and 20 CFR 418.1205 lists them: your spouse dies; you marry; your marriage ends through divorce or annulment; you or your spouse stop working or reduce the hours you work; you lose income-producing property for reasons beyond your control (not a sale or ordinary investment risk); you or your spouse experience a scheduled cessation, termination or reorganization of an employer's pension plan; or you or your spouse receive a settlement from an employer because of its closure, bankruptcy or reorganization.[14] A jackpot, a losing year, a break-even year, a Roth conversion or a one-time sale is not on the list. The request goes to Social Security on its life-changing-event form with proof of the event.
Do I owe tax on all my winnings if I take the standard deduction?
Yes. Losses are deductible only on Schedule A, so a retiree who takes the standard deduction deducts no gambling losses and the 90 percent cap is beside the point: 100 percent of winnings are taxed, in 2025 and 2026 alike. For tax year 2026 the standard deduction is $16,100 for single filers and married persons filing separately, $32,200 for married couples filing jointly and $24,150 for heads of household (Revenue Procedure 2025-32).[8] Itemizing pays only when your Schedule A total, including 90 percent of your gambling losses, exceeds those figures. In the $50,000 example above, $45,000 of deductible losses clears the bar on its own and cuts taxable gambling income from $50,000 to $5,000; a retiree with $9,000 of losses may not clear it and then owes tax on every winning dollar.
Our page on whether you can deduct gambling losses walks through the Schedule A mechanics, and the 90% gambling loss cap page states the rule with its history.
Does gambling income reduce the $6,000 senior deduction?
It can. For tax years 2025 through 2028, taxpayers who reach age 65 by the last day of the year may deduct $6,000 each ($12,000 for a married couple where both qualify), whether or not they itemize, but the deduction phases out for modified adjusted gross income over $75,000 ($150,000 for joint filers).[9] Gross winnings raise MAGI and losses do not lower it, so a single retiree with $60,000 of other income who wins $30,000 at the slots is at $90,000 and inside the phase-out even in a year the slots took it all back. Other income-tested programs that key off AGI or MAGI see the same gross figure.
Does the $2,000 W-2G threshold mean smaller wins are not taxable?
No. The W-2G threshold is a reporting rule for the casino, not a taxability rule for you. The IRS Instructions for Forms W-2G and 5754 (Rev. 01/2026) set the minimum threshold for payments made in calendar year 2026 at $2,000, adjusted yearly for inflation from 2026 on, with the 300-times-the-wager test for other wagers; in 2025 the lines were $1,200 for slots and bingo and $1,500 for keno.[4] A $1,900 slot payout in 2026 produces no form and is still income on Schedule 1, still in AGI, still in the Social Security worksheet and still in MAGI for Medicare.[2] The form has boxes for reportable winnings, date won, type of wager and withholding; it has no box for losses. Our W-2G and 1099 thresholds page has every threshold by game.
What does the 2026 90% rule actually say?
As amended, 26 U.S.C. 165(d)(1) provides that for losses from wagering transactions the amount allowed as a deduction for any taxable year “(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.” Section 165(d)(2) adds that such losses include “any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.” The amendment is section 70114 of Public Law 119-21, signed July 4, 2025, and applies to taxable years beginning after December 31, 2025.[1][5] The first return affected is the 2026 return filed in early 2027; a 2025 return filed in 2026 still deducts 100 percent of losses up to winnings for itemizers.
Will Congress repeal the 90% rule before I file?
Status as of 2026-09-28: not repealed. Plan on the 90% rule.
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 on September 14, 2026, carrying language that would restore the full deduction for gambling losses, up to winnings, beginning with 2026 returns.[15][17] The standalone FAIR BET Act, H.R. 4304 by Rep. Dina Titus, has the same goal, and the FULL HOUSE Act carries it in the Senate with Senators Cortez Masto, Rosen and Cruz.[16]
The House is not scheduled to return until after the November 2026 midterm elections, so no floor vote is expected before then; if the House passes the bill it then goes to the Senate; nothing is enacted.[15] We track it on our repeal status page and update this box when it changes.
A repeal would restore the deduction, not the AGI problem. Even at 100 percent of losses, gross winnings would still raise combined income for Social Security and MAGI for Medicare, exactly as they did in 2025. If a repeal is enacted after you file a 2026 return under the 90 percent rule, the return can be amended.
What should a retiree do before the lookback locks?
- Keep a session log now. Topic 419 requires an accurate diary or similar record of winnings and losses, with receipts, tickets, statements or other records, to deduct anything.[2] Publication 529 lists what the diary should hold: date and type of wager, the establishment, who was with you, and the amounts won or lost.[3] Start with our session log template.
- Collect a win/loss statement from every casino and every W-2G. Use your players card everywhere; without one there is no win/loss statement for that play, and an undocumented dollar of loss is worth nothing.
- Reconcile the forms before filing. W-2Gs, win/loss statements and the IRS wage and income transcript rarely agree on their own; our guide to how gambling tax documents reconcile shows how they fit together.
- Compare itemizing with the standard deduction using 90 percent of losses against $16,100, $32,200 or $24,150 for 2026.
- Plan the year, not just the return. Because MAGI is measured per calendar year and IRMAA is a cliff, a preparer can weigh the timing of large play, retirement account withdrawals and Roth conversions against the $109,000 and $218,000 lines. Run the calculator before December, while there is still time to act.
We reconcile every statement, W-2G and transcript line into one workpaper so the gross winnings, the deductible losses and the phantom-income figure are computed, not estimated; see a sample file or how it works for players.
Frequently asked questions
- Do gambling losses reduce the income Medicare uses for IRMAA?
- No. Gambling losses are an itemized deduction on Schedule A; they lower taxable income, not adjusted gross income. Medicare's income-related adjustment uses modified adjusted gross income from your return two years earlier (20 CFR 418.1135), so every dollar of gross winnings counts and no dollar of losses offsets it.
- Can a break-even gambling year make my Social Security taxable?
- Yes. Gross winnings go into adjusted gross income and therefore into the figure IRS Publication 915 compares with your base amount: one-half of your benefits plus all your other income. Above $34,000 single or $44,000 married filing jointly, up to 85% of benefits are taxable. A retiree with $24,000 of benefits and $50,000 of winnings reaches $62,000 even after losing all $50,000 back.
- What does the 2026 90% rule add for a retiree?
- For tax years beginning after December 31, 2025, only 90% of gambling losses are deductible, still capped at winnings (26 U.S.C. 165(d), as amended by Public Law 119-21 section 70114). Win $50,000 and lose $50,000 in 2026 and an itemizer deducts $45,000 and pays tax on $5,000 of phantom income. A non-itemizer deducts nothing under either year's law.
- How much can gambling winnings raise Medicare premiums in 2026?
- Crossing the first 2026 threshold ($109,000 single, $218,000 joint, measured on the 2024 return) lifts Part B from $202.90 to $284.10 a month, $974.40 for the year, and adds $14.50 a month to Part D, $1,148.40 more for the year. Crossing $137,000 single or $274,000 joint makes Part B $405.80 with $37.50 added to Part D, about $2,885 more for the year (CMS, November 14, 2025).
- Can I appeal IRMAA because I lost the money back?
- No. Under 20 CFR 418.1205 a new determination is available only for a major life-changing event: death of a spouse, marriage, divorce or annulment, stopping work or reducing hours, loss of income-producing property, loss of pension income, or an employer settlement payment. A jackpot year, a losing year or a break-even year is not on the list.
- Does the $2,000 W-2G threshold mean smaller wins are not taxable?
- No. The $2,000 figure is the minimum for a casino to file Form W-2G on payments made in 2026 (up from $1,200 for slots and bingo and $1,500 for keno in 2025). IRS Topic 419 requires you to report all gambling winnings on Schedule 1, whether or not a form was issued, and every dollar counts toward AGI.
- Does gambling income reduce the $6,000 senior deduction?
- It can. The deduction for taxpayers age 65 and older, $6,000 per person for tax years 2025 through 2028, phases out for modified adjusted gross income over $75,000 ($150,000 for joint filers). Gross winnings raise MAGI; losses do not lower it, so a big W-2G year can shrink or erase the deduction.
- Has Congress repealed the 90% rule for 2026?
- Not as of September 28, 2026. On September 16, 2026 the House Ways and Means Committee voted 38-5 to advance H.R. 10357 carrying language that restores the full deduction beginning with tax year 2026, but the House is not scheduled to return until after the November 2026 elections, the Senate has not acted, and nothing is enacted.
Sources
- 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)
- IRS Tax Topic 419, Gambling income and losses (page last reviewed June 11, 2026)
- IRS Publication 529, Miscellaneous Deductions, Gambling losses up to the amount of gambling winnings (Rev. December 2020)
- IRS Instructions for Forms W-2G and 5754 (Rev. January 2026)
- Congress.gov, H.R. 1 (Public Law 119-21, One Big Beautiful Bill Act), text, section 70114 (signed July 4, 2025)
- IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits (2025 edition, for 2025 returns)
- IRS, Frequently asked questions, Social Security income (current as fetched September 27, 2026)
- IRS, IR-2025-103, tax inflation adjustments for tax year 2026 (Revenue Procedure 2025-32) (October 9, 2025)
- IRS, One Big Beautiful Bill Act: tax deductions for working Americans and seniors (current as fetched September 27, 2026)
- CMS, 2026 Medicare Parts A and B premiums and deductibles (fact sheet with Part B and Part D income-related monthly adjustment amounts) (November 14, 2025)
- Medicare.gov, Medicare costs (2026 Part B premium and deductible) (2026 figures, fetched September 27, 2026)
- 20 CFR 418.1135, What modified adjusted gross income information will we use to determine your income-related monthly adjustment amount (Legal Information Institute) (current eCFR text)
- 20 CFR 418.1010, Definitions (modified adjusted gross income) (Legal Information Institute) (current eCFR text)
- 20 CFR 418.1205, What is a major life-changing event? (Legal Information Institute) (current eCFR text)
- Covers, House committee advances repeal of 90 percent gambling loss deduction limit (September 16, 2026)
- CPA Practice Advisor, Bill to reverse change made to gambling tax code advances in House (September 24, 2026)
- GovInfo, H.R. 10357, Digital Asset Tax Certainty Act, as introduced (introduced September 14, 2026)
This page is general information about how gambling winnings interact with the taxation of Social Security benefits, Medicare income-related premium adjustments and the 90 percent gambling loss limit, written to be checked against the sources it cites. It is not tax advice for your situation. A licensed CPA or enrolled agent should review your return before it is filed.