Sports bettors could eventually get relief from a controversial federal tax rule that took effect in 2026. The House Ways and Means Committee is considering a proposal that would once again allow qualifying taxpayers to deduct gambling losses up to the full amount of their winnings. The change is included in a broader tax package scheduled for committee consideration on Sept. 16.
The FULL HOUSE Act would return federal gambling tax rules to their previous structure, allowing wagering losses to be deducted up to the amount of wagering gains.
Rep. Steven Horsford has been pushing for movement on the proposal throughout the year and said this week that his FULL HOUSE Act was heading for a Ways and Means committee.
The legislation would change the Internal Revenue Code so that losses from wagering transactions can once again be deducted up to the amount won. The proposal would apply to tax years beginning after Dec. 31, 2025, meaning it could address the current 2026 rules if enacted.
The House committee is considering the larger tax package containing the gambling provision on Sept. 16. This is progress after previous attempts to change the rule struggled to advance.
The problem started with a change to the federal tax code that took effect in 2026. According to the IRS, taxpayers who itemize gambling losses can deduct the lesser of their gambling winnings or 90% of their losses. Before the change, losses could be deducted against winnings up to 100%.
The difference can create an unusual result for bettors who wager large amounts during the year.
Consider someone who records $100,000 in gambling winnings and $100,000 in losses. The bettor finished the year without a gambling profit, but under the 90% limitation, only $90,000 of those losses could be deductible. That leaves $10,000 in net taxable gambling income for federal tax purposes despite the bettor breaking even.
The issue can become more significant for high-volume sports bettors who wager large amounts of money through sportsbooks over the course of a year.
This is why restoring the previous policy would be fairer for sports bettors.
This isn’t the first attempt to reverse the change. Rep. Dina Titus introduced the FAIR BET Act with the same goal of restoring full gambling loss deductions. One effort to accelerate the proposal involved attaching it to the National Defense Authorization Act. That approach failed after the House Rules Committee rejected the amendment.
The FULL HOUSE Act is now taking a different route. Its language has been included within the much broader Digital Asset Tax Certainty Act rather than relying on a standalone gambling bill to move through Congress.
With that said, committee consideration is still only one stage of the process. The legislation would need to advance through Congress and be signed into law before the 100% deduction is restored.
At the moment, the 90% limit remains in place. However, the committee consideration gives supporters of the tax change another opportunity to reverse the rule after earlier efforts stalled.
It remains to be seen how this will be resolved, but there’s clear momentum for change here.
