I play online slots for fun. How do slot winnings and losses work when I file my taxes? Do I owe tax if I lost more than I won overall?
Gambling winnings, including online slots, are taxable income in the US, whether or not you get a tax form. Losses can only reduce that income if you itemize deductions on Schedule A, and only up to the amount you won. If you take the standard deduction, as most people do, your losses do not offset your winnings at all, so you can owe tax even in a year you lost money overall. Slot results are counted per session, not per spin. Under the IRS slot safe harbor in Notice 2015-21, a session generally runs from your first bet on a type of game until your last bet on that game the same calendar day at the same casino or site, and each session is its own win or loss. Your online casino account history or win/loss statement is the easiest way to see this, and the IRS expects you to keep records such as that statement or a diary. Form W-2G: for 2025 the casino issues one when a single slot win is $1,200 or more; for payments made in 2026 the threshold rises to $2,000. Smaller wins are still taxable. The rules also changed for 2026 returns: starting with tax year 2026, you can deduct only 90% of your gambling losses, still capped at your winnings. So a player who won $10,000 and lost $10,000 in 2026 would still have $1,000 of taxable gambling income. For 2025 returns, losses are deductible up to 100% of winnings. State tax is separate. Illinois, for example, does not allow any deduction for gambling losses, so residents pay Illinois tax on all gambling winnings. Other states have their own rules, so check your state revenue department. If you have large winnings, a mix of sessions across several sites, or you think itemizing might help, a tax professional can tell you whether itemizing beats the standard deduction for you.
I got a W-2G but lost most of it back later that day. What do I do?
Report the full W-2G amount as income. Then, if you itemize, deduct your documented losses on Schedule A (100% of losses up to your winnings on 2025 returns, 90% from tax year 2026). If you count your slot play by session, the session net result from your casino records is what matters, so keep your win/loss statement with your return. If you do not itemize, the W-2G amount is taxed in full.
