The IRS has published updated guidance confirming that the casino slot tax reporting threshold has almost doubled for 2026.
As first reported in July, the One Big Beautiful Bill Act (OBBBA) included a measure to increase the minimum amount that needs to be reported as a jackpot win on a slot machine in a land-based casino for the first time in nearly half a century.
“For calendar years after 2025, the minimum threshold amount for reporting certain payments and backup withholding on certain information returns, including the Form W-2G, will be adjusted yearly for inflation,” stated the IRS in a “What’s New” section of its guidance for filing W-2G forms. “The minimum threshold amount for payments made in calendar year 2026 is $2,000.”
The new amount of $2,000, effective on Jan. 1, will be increased in line with inflation each year beyond 2026.
Casinos and states stilll need to adjust
It has taken months for the IRS to confirm the change, meaning casinos have been left in limbo until now.
Now, state regulators will need to update regulations to recognize the new numbers, which is a process that could slow down implementation at casinos, which might not all be in alignment with the IRS update by Jan. 1.
Even though the threshold for triggering a W2-G is going up, all slot winnings are still taxable, so there should be no adjustments on W2-Gs triggered at the lower rate.
90% cap on gambling loss deduction set to go into effect
The other major tax change for gamblers set to go into effect on Jan. 1 is a cap on how much of their losses they are allowed to deduct from their winnings. Despite the best efforts from industry lobbyists and politicians such as Rep. Dina Titus, there has been no progress in overturning the change from allowing 100% of losses to be deducted to now just 90%.
For many professional gamblers making hundreds, if not thousands of wagers over the course of the year, the change can have a big impact, as the margins for their wins are very slim and what may look like a very big number in the win column is offset by a comparably large, if not larger number in the loss column. In other words, gamblers can now have a losing year and still be forced to pay taxes on their play.
Long overdue, but could have been better
Casinos are required to issue a W2-G tax form whenever a patron wins a slot machine jackpot that hits or exceeds the threshold, as well as to immediately shut down the machine in question, often offlining it for up to 45 minutes.
Since the slot jackpot reporting threshold was first set in 1977, it has remained at its original amount of $1,200 despite inflation effectively greatly diminishing that figure over the following decades. The Bureau of Labor Statistics‘ inflation calculator suggests that $1,200 in 1977 equates to nearly $6,400 in 2025 dollars.
The American Gaming Association (AGA) repeatedly called for the level to be increased in past years, urging for the cut-off for miscellaneous gambling like horse racing, slots and keno to be raised to as high as $5,000.
AGA SVP of Government Relations Chris Cylke told SBC Americas at the time the change to $2,000 was first revealed that it was “a hard-fought win” and a “long-overdue modernization” that will reduce the regulatory burdens on casinos and improve the customer experience.
“It’s not the $5,000 that we wanted,” acknowledged AGA President and CEO Bill Miller at the Global Gaming Expo in October. “But we are getting there and we take the win and we will continue to work to get to that $5,000 number.”
The likes of Nevada Rep. and Congressional Gaming Caucus Co-Chair Dina Titus also advocated for that higher amount. Titus noted to SBC Americas that the IRS’s own advisory council recommended that the threshold be raised to over $5,000. She called the increase to $2,000 “inadequate.”
