You can write off losing lottery tickets on your taxes, but the deduction is narrow: losses reduce only your gambling winnings for the same year, you have to itemize on Schedule A to claim them, and starting with the 2026 tax year only 90% of your losses count.1Office of the Law Revision Counsel. 26 U.S. Code 165 – Losses Losing tickets cannot offset your wages, business income, or investment gains. And if you don’t have contemporaneous records to back them up, the deduction can be thrown out entirely while your winnings stay fully taxed.
Losses Only Wipe Out Winnings
Gambling losses are deductible solely against gambling winnings reported in the same tax year.2Internal Revenue Service. Topic no. 419, Gambling Income and Losses If you won $8,000 on lottery tickets and spent $12,000 buying them, your deduction is capped at $8,000. The extra $4,000 disappears. It doesn’t carry forward to next year, it doesn’t carry back, and it can’t offset any other type of income.
A second cap now sits on top of that one. Under the One, Big, Beautiful Bill signed in 2025, only 90% of gambling losses are deductible against winnings starting in the 2026 tax year.1Office of the Law Revision Counsel. 26 U.S. Code 165 – Losses Using the same numbers, 90% of $8,000 is $7,200, so you would still owe tax on $800 of winnings even though you spent more on tickets than you won. This is a permanent change to the tax code.
Timing is also strict. Tickets you bought in 2025 can’t offset a jackpot you hit in 2026. Only losing tickets from the same year as the winnings count.
You Have to Itemize, Which Is the Real Wall
The gambling loss deduction lives on Schedule A. If you take the standard deduction, your losing tickets do nothing for you, and every dollar of winnings is taxed with no offset at all.2Internal Revenue Service. Topic no. 419, Gambling Income and Losses
For 2026, the standard deduction is $16,100 for single filers, $24,150 for heads of household, and $32,200 for married couples filing jointly.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill Your losing tickets only help if your total itemized deductions — losses, plus items like state and local taxes, mortgage interest, and charitable gifts — clear that threshold. For most casual lottery players, they won’t. That’s the single biggest reason writing off losing tickets fails in practice: people qualify to itemize on paper, but the standard deduction is worth more.
Keep the Tickets, and Keep a Log
The burden of proving both what you won and what you lost is entirely on you. Round estimates and vague recollections won’t survive an audit. Insufficient records can mean the deduction is disallowed even when the losses were real.
The IRS expects an accurate diary or log of your gambling activity kept throughout the year, with each entry showing:4Internal Revenue Service. Publication 529 (12/2020), Miscellaneous Deductions – Section: Gambling Losses Up to the Amount of Gambling Winnings
- The date and type of wager
- The name and address of the retailer or venue
- The names of anyone with you
- How much you won or lost that session
For lottery play specifically, keep the losing tickets themselves along with a record of every purchase — dates, amounts, and where you bought them. Bank records showing withdrawals used to buy tickets and deposits from winnings help too. So does any W-2G a payer issued.
A shoebox of losing tickets on its own is not persuasive. Tax courts have seen enough attempts to substantiate deductions with tickets someone didn’t actually buy that a pile of stubs without a matching diary tends to get discounted. The log is what makes the tickets credible.
How the Numbers Go on Your Return
Winnings and losses go on two different forms, and you can’t just net them.
Report the full amount of your gambling winnings on Schedule 1 (Form 1040), Line 8b.5Internal Revenue Service. 2025 Schedule 1 (Form 1040) – Section: Part I Additional Income That total flows into Line 8 of your 1040 as income. The IRS wants to see the gross figure, not winnings minus losses.6Internal Revenue Service. Five Important Tips on Gambling Income and Losses
If you itemize, enter your deductible losses on Schedule A under Other Itemized Deductions, Line 16.2Internal Revenue Service. Topic no. 419, Gambling Income and Losses For 2026, that amount cannot exceed 90% of the winnings you reported on Schedule 1. Only the actual money staked and lost counts. Travel to buy tickets, meals, and similar expenses are not deductible losses for a casual gambler.7Internal Revenue Service. Publication 529 (12/2020), Miscellaneous Deductions
The AGI Problem Even Break-Even Players Hit
Here is the part that catches people. Winnings raise your adjusted gross income the moment you report them on Schedule 1. Losses come off later, on Schedule A, and Schedule A deductions reduce taxable income without reducing AGI.
AGI drives eligibility for a lot of things beyond your basic tax bill. A large lottery win can:
- Push your modified AGI over Medicare’s IRMAA thresholds and raise your Part B and Part D premiums, even if losing tickets zero out the winnings for income tax purposes8HHS.gov. In the Case of R.F. – Decision of Medicare Appeals Council
- Phase you out of the Child Tax Credit, Earned Income Tax Credit, or education credits
- Shrink or eliminate ACA marketplace premium subsidies
- Increase income-driven federal student loan payments
If you hit a sizable win and nothing was withheld, the IRS expects you to make an estimated tax payment; otherwise you can end up with an underpayment penalty at filing.2Internal Revenue Service. Topic no. 419, Gambling Income and Losses
Your State May Not Let You Deduct at All
Federal rules are only half the picture. Several states tax gambling winnings without allowing any deduction for losses, even if you properly deducted them on your federal return. In those states, you owe state income tax on the gross winnings no matter how many losing tickets you have. Others allow the deduction but cap it more aggressively than the federal rules do. States with no income tax, like Texas, Florida, and Nevada, don’t create the problem. If you live somewhere in between, check your state’s income tax instructions before assuming the federal deduction carries over — a break-even year on the lottery can still produce a real state tax bill.