The Internal Revenue Service has released new guidance verifying that the tax reporting threshold for slot machine jackpots in land-based casinos will increase significantly starting in 2026.
As initially highlighted in July, the One Big Beautiful Bill Act (OBBBA) introduced a provision to raise the jackpot reporting limit on slot machines for the first time in almost 50 years.
In the “What’s New” section of its instructions for Form W-2G, the IRS explained: “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.” It added, “The minimum threshold amount for slot machine jackpot payments made in calendar year 2026 is $2,000.”
This updated $2,000 limit takes effect on January 1, 2026, and will be adjusted annually for inflation thereafter.
Casinos and Regulators Face Implementation Challenges
The IRS took several months to officially confirm this update, leaving casino operators uncertain in the interim.
State gaming regulators must now revise their rules to align with the federal change for slot machine jackpots, a step that may delay full rollout. As a result, not all casinos may be fully compliant by January 1.
Importantly, while the W-2G trigger point is rising, all gambling winnings remain fully taxable. Players should track their sessions carefully for accurate reporting.
90% Cap on Gambling Loss Deductions Incoming
Another significant tax shift for gamblers begins January 1, 2026: a new limit allowing only 90% of losses to be deducted against winnings.
Despite strong advocacy from industry groups and lawmakers like Rep. Dina Titus (D-NV), efforts to repeal this provision—from full deduction to 90%—have not succeeded.
For professional players who place thousands of bets annually, this rule could prove costly. Thin profit margins mean large win totals are often balanced by even bigger losses. Under the new cap, a net losing year could still result in a tax bill.
A Welcome but Partial Victory
When a slot jackpot meets or exceeds the threshold, casinos must issue a W-2G form, verify the win, and typically lock the machine—sometimes for up to 45 minutes.
The $1,200 limit, unchanged since 1977, has long been eroded by inflation. Adjusted for today, that original amount equals roughly $6,400.
The American Gaming Association (AGA) has advocated for years to modernize this rule, pushing for a $5,000 threshold for slots, keno, and similar games.
Upon the initial announcement of the $2,000 change, AGA Senior Vice President Chris Cylke described it as a “hard-fought win” and “long-overdue modernization” that eases burdens on operators and enhances the player experience.
AGA President and CEO Bill Miller acknowledged at the Global Gaming Expo in October: “It’s not the $5,000 that we wanted, but we are getting there and we take the win and we will continue to work to get to that $5,000 number.”
Rep. Dina Titus, co-chair of the Congressional Gaming Caucus, has also championed a higher figure. She pointed out that the IRS’s own advisory council suggested exceeding $5,000 and labeled the $2,000 increase “inadequate.”
