You can claim losing lottery tickets on your taxes, but only if you itemize deductions on Schedule A, only up to the amount of lottery or other gambling winnings you report for the year, and — for tax years beginning in 2026 — only up to 90% of what you actually lost. Everything else about claiming losing lottery tickets flows from those three limits.
The 2026 Rule: 90% of Losses, Capped at Winnings
Before 2026, you could deduct 100% of your gambling losses up to the amount of your gambling winnings. The One, Big, Beautiful Bill Act changed that. For tax years beginning in 2026, only 90% of your wagering losses are deductible, and the deduction is still capped at your total winnings for the year.
The math is straightforward. If you had $5,000 in lottery winnings and $5,000 in losing tickets, you can deduct $4,500. The remaining $500 of winnings is taxable. In the 22% bracket, that’s $110 of tax you wouldn’t have owed under the old rules.
Two things follow from this. First, if you had any losses at all, you’ll owe some tax on your winnings even when your losses equaled or exceeded them. Second, the deduction can only offset gambling winnings. It cannot create a net loss against your wages or other income. If your losses were larger than your winnings, the excess is gone; you don’t carry it forward.
You Have to Itemize, and That’s the Real Filter
Gambling losses are an itemized deduction, reported under “Other Itemized Deductions” on Schedule A.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses Itemizing only helps if your total itemized deductions beat the standard deduction for your filing status.
For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.2Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
This is where most casual players get stuck. If you won $2,000 and have $2,000 in losing tickets, your maximum loss deduction is $1,800. Giving up a $16,100 standard deduction as a single filer to claim $1,800 in losses and nothing else would raise your tax bill, not lower it. Itemizing for lottery losses generally only pays off when your mortgage interest, state and local taxes, and charitable giving already push you close to the standard deduction on their own.
A Worked Example
Suppose you’re a single filer in 2026. You won $8,000 on lottery tickets during the year and spent $8,000 on losing tickets. You also paid $11,000 in state and local taxes and $4,000 in mortgage interest.
Your gambling loss deduction is $7,200, which is 90% of $8,000. Add that to your other itemized deductions and you get $22,200, comfortably above the $16,100 standard deduction. Itemizing wins. You’ll still owe tax on $800 of your winnings — the 10% of losses the new rule takes away — but the switch to Schedule A is still worth it because of the taxes and mortgage interest already there.
Records the IRS Will Actually Accept
In an audit, the burden is on you to prove every dollar of losses. The IRS wants records created at the time of the gambling activity, not a stack assembled at tax time.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses A pile of undated tickets won’t hold up.
Save the Tickets
The simplest evidence is the losing tickets themselves. Sort them by date and game. A labeled envelope per month works fine for scratch-offs. Draw-game tickets for Powerball or Mega Millions already print the date, draw number, and retailer location, which is exactly what the IRS wants to see.
Keep a Gambling Diary
If you don’t want to save every ticket, keep a diary or log. At minimum it needs the date of each purchase, the type of game, where you bought the ticket, and the amount you spent. The IRS also expects a note of anyone else present, which for solo lottery buys is a quick entry.3Internal Revenue Service. Diary or Similar Record A spreadsheet you update the same day works. A year-end reconstruction from memory does not.
Back It Up
Bank statements, debit card records, and ATM receipts from lottery retailers help corroborate that you spent what you say you spent.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses They don’t replace tickets or a diary because a convenience-store charge doesn’t prove a lottery purchase, but paired with a log entry they tie the amounts together.
How the Winnings Side Gets Reported
You have to report the winnings before the losses can offset anything. All gambling winnings go on Schedule 1 of Form 1040 and feed into your total income, whether or not you received a tax form for them.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses
For 2026, the lottery commission or payer issues a Form W-2G when your winnings hit $2,000, an amount that will adjust annually for inflation.4Internal Revenue Service. Instructions for Forms W-2G and 5754 Not getting a W-2G doesn’t get you off the hook. Small wins still count as income, and you still need documentation for both sides of the ledger if you plan to deduct losses.
One structural point worth keeping in mind: your gross winnings raise your adjusted gross income, and the loss deduction happens below the AGI line. Even a well-documented loss deduction won’t undo that AGI increase, which can matter for other parts of your return.
Lottery Pools and Shared Tickets
If you won as part of a pool, you can’t simply split the money informally and each deduct your own tickets against your share. The person cashing the ticket fills out Form 5754 listing each winner’s name, address, taxpayer identification number, and share of the prize, and the lottery commission then issues a separate W-2G to each person.4Internal Revenue Service. Instructions for Forms W-2G and 5754 Once each pool member has their own reported share of winnings, they can deduct their own losing tickets against it, following the same 90% and itemization rules.
Keep a written pool agreement showing who paid in, how much, and how the winnings are divided. Form 5754 stays with the payer and doesn’t go to the IRS, but the agreement protects everyone if individual returns are questioned later.
State Returns Don’t Always Follow the Federal Rule
State tax treatment of lottery losses varies. Most states that tax lottery income allow you to deduct losses up to the amount of winnings, roughly following the federal approach, but a few tax the full prize and disallow any deduction for losses. If you bought a winning ticket in a state other than where you live, you may owe tax to both states, though most give you a credit for taxes paid to the other. Some cities and counties impose their own income taxes on lottery winnings on top of that. Check the rules for both your state of residence and the state where you bought the ticket before assuming your federal loss deduction carries over.
Non-Resident Aliens Generally Cannot Deduct
If you’re not a U.S. citizen or resident for tax purposes, U.S.-source lottery winnings go on Form 1040-NR, and in most cases you cannot deduct gambling losses against them.1Internal Revenue Service. Topic No. 419, Gambling Income and Losses Canadian residents are the main exception under a tax treaty. For everyone else in this category, the full winnings are taxed with no offset for losing tickets.