U.S. Representatives Steven Horsford (D-Nev.) and Max Miller (R-Ohio) have reintroduced the FULL HOUSE Act in the House of Representatives. This bipartisan legislation seeks to overturn a recent federal tax change that limits the deduction of gambling losses to 90% of the amount of winnings. This regulatory adjustment, set to take effect in January 2026, is viewed by critics as imposing taxes on income that gamblers never actually receive, thereby impacting both casual and professional gamblers.
The policy change, which emerged from the “One Big Beautiful Bill Act” passed last year, deviates from the previous norm where gamblers could deduct losses fully, up to the amount of their winnings. Under the upcoming rules, a gambler who breaks even, reporting both $100,000 in winnings and losses, would still face taxation on $10,000 due to the deduction cap. This has led to what some tax professionals and gaming organizations describe as “phantom income,” where individuals are taxed on non-existent profits.
The FULL HOUSE Act aims to reinstate the traditional full deduction, aligning the treatment of gambling with other activities where net income is calculated after expenses. Horsford has emphasized the unfairness of the current rule, particularly for Nevada, a state whose economy is heavily reliant on tourism and gaming. “Taxing individuals on earnings they never realized is unjust and could detrimentally impact Nevada’s tourist-driven economy,” Horsford stated.
This legislative effort is not without precedent, as a similar proposal by Rep. Dina Titus (D-Nev.) in a previous congressional session failed to advance to a vote. Titus has criticized the deduction cap for taxing hypothetical profits, urging legislative action to address this issue. Despite the support for the FULL HOUSE Act, its fate remains uncertain. The deduction cap was part of a broader tax package enacted in 2025, and any reversal would necessitate re-evaluating that comprehensive policy decision.
The bill’s passage would require navigating the complexities of congressional approval, along with the uncertain stance of President Donald Trump on gambling tax matters. While Trump has expressed ambiguity on the issue, indicating a need for further consideration, his administration’s position could play a pivotal role in the bill’s prospects.
Looking ahead, the reintroduction of the FULL HOUSE Act marks the beginning of a potentially contentious debate over gambling taxation as 2026 approaches. The outcome will be closely watched by stakeholders in casino-intensive states and the gambling community, who view the current rule as a financially punitive measure. The next steps involve legislative deliberations and potential discussions with the executive branch, as proponents of the bill advocate for a return to the previous deduction framework.
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