Congress advances bill to fully deduct gambling losses, reversing cap from earlier tax overhaul

The House Ways and Means Committee just overwhelmingly approved a provision that would let gamblers deduct 100% of their losses against winnings on their federal taxes. The vote was 38-5. The measure reverses a cap that would have limited gambling loss deductions to 90% of winnings, a restriction baked into the One Big Beautiful Bill Act signed on July 4, 2025. That 10% gap created a tax bill on money they never actually pocketed. The phantom income problem Under the capped system, a gambler who won $100,000 and lost $100,000 in the same year would still owe federal income tax on $10,000. That $10,000 is what the industry calls “phantom income.” The provision is embedded in H.R. 10357, formally titled the Digital Asset Tax Certainty Act. It would apply retroactively to tax years beginning after December 31, 2025, meaning the 90% cap effectively never takes hold. The Joint Committee on Taxation estimates the full deductibility restoration will reduce federal tax revenues by roughly $2 billion over the 2027-to-2036 window. Who’s pushing this and why The bill’s primary sponsors are Rep. Dina Titus, a Democrat from Nevada, and Sen. Ted Cruz, a Republican from Texas. MGM Resorts, Caesar...