- New 2026 rules limit gambling loss deductions to only 90% of total winnings.
- Winnings are taxed as ordinary income even if no tax form is received.
- Losses are only deductible if the taxpayer chooses to itemize on their return.
Federal tax law treats all gambling winnings from 2026 World Cup betting as taxable ordinary income, and a new rule taking effect for tax year 2026 will limit how much bettors can deduct in losses.
The change rewrites the math for sports gamblers. Under IRC Section 165(d) as amended by Public Law 119-21, Section 70114, taxpayers can deduct only 90% of total gambling losses, still capped at the amount of winnings, a shift that can leave bettors owing tax even when their betting activity breaks even overall.
That creates what tax professionals call phantom income. A bettor who wins and loses the same amount during the tournament can still end up with taxable income on a federal return because the deduction no longer fully offsets the winnings.
The new IRS Tax Rules apply to World Cup wagers the same way they apply to other sports bets. There is no World Cup-specific exemption, and bettors must report winnings whether or not they receive a tax form from a sportsbook.
For federal filing, the rule is broad: report every dollar of net winnings, defined as proceeds minus wager, on a federal tax return. Those winnings go on Schedule 1 of Form 1040 as other income, while gambling losses can go on Schedule A only if the taxpayer Theft Deductions Under TCJA for Federally Declared Disasters”>itemizes deductions.
The 90% Loss Deduction is the central shift for 2026. If a bettor has $10,000 winnings and $10,000 losses, the allowable deduction is $9,000, leaving $1,000 taxable income.
A second example in the rule shows how the cap works when losses exceed winnings. A bettor with $50,000 winnings and $60,000 losses can deduct $54,000, but because deductions still cannot exceed winnings, taxable income falls to $0 taxable after offset.
That framework matters for anyone planning to bet during the 2026 World Cup, from occasional bettors placing a few match wagers to high-volume gamblers making repeated bets across the tournament. The federal government taxes the winnings side in full, then lets taxpayers offset losses only within the narrower deduction rule.
Itemization now carries more weight. Losses are deductible only if the taxpayer itemizes on Schedule A, which means people who take the standard deduction get no offset at all for gambling losses.
For 2026, the standard deduction is listed as $16,100 single/$32,200 married filing jointly. Bettors who use that deduction instead of itemizing must still report their gambling winnings, even if they also lost money on other bets during the year.
That can sharply change the after-tax result. A bettor who thought a nearly even year would wash out may instead face federal tax because winnings are included in income while losses receive either a limited deduction or no deduction if the filer does not itemize.
Recordkeeping also becomes more important under the new rule. Bettors need detailed logs of wagers, dates, amounts, and outcomes to support any claimed losses.
Apps, betting tickets, and account statements can all matter. The IRS requires proof of losses, and this points to heightened audit risks for high-volume gamblers.
The reporting rules for sportsbooks also changed for 2026 World Cup bets. Sportsbooks must issue Form W-2G and report to the IRS if winnings minus wager are ≥ $2,000 and also ≥ 300 times the wager.
That threshold is lower than in prior years. It is also scheduled to be inflation-adjusted post-2026.
When a sportsbook issues a Form W-2G, several boxes carry information bettors may need when filing. Box 1 reports reportable winnings, Box 3 reports the wager amount and type, such as sports wagering, and Box 4 shows federal tax withheld, if any.
Receiving no Form W-2G does not erase the tax bill. Federal law still requires taxpayers to report every dollar of net winnings, regardless of whether a sportsbook issued the form.
That point matters for smaller and mid-sized bets during a tournament as large as the 2026 World Cup. Many winning wagers may fall below reporting thresholds at the sportsbook level, but they still count for tax purposes when the bettor files a 2026 return.
Withholding rules are separate from reporting rules, and they are narrower. Mandatory 24% federal withholding applies if winnings minus wager are more than $5,000 and also at least 300 times wager.
Most ordinary World Cup bets will not hit that withholding trigger. Standard bets such as moneyline and spreads usually will not trigger automatic withholding unless payouts are extraordinarily high.
That does not mean the tax disappears. Smaller wins may come with no automatic withholding at all, but the tax is still due when the return is filed.
Another withholding rule applies when the bettor does not provide a taxpayer identification number. In that case, backup withholding of 24% can apply.
The practical effect is that many bettors may go through the 2026 World Cup without seeing federal tax withheld from their sportsbook payouts, then face a bill later. For taxpayers who do not plan ahead, that can turn a profitable tournament into an unexpected filing-season expense.
The new 2026 framework also means gross winning sessions matter more than many bettors assume. A gambler may feel flat or slightly down after a series of wagers, but the federal calculation still starts by counting taxable winnings and then applying the narrower loss offset.
That is why break-even betting can now create roughly 10% tax exposure based on a bettor’s bracket. That is a practical budgeting issue for anyone expecting to wager regularly during the tournament.
State taxes add another layer. Tax treatment varies by state, and the federal 90% cap does not necessarily control state returns.
New Jersey shows how those differences can work. The state allows 100% loss netting at the state level despite the federal 90% cap.
That means a bettor could face one result on a federal return and a different result on a state return. Some states also require separate reporting, which can complicate filing for bettors who place many wagers over the course of the tournament.
For taxpayers trying to prepare, a few practical steps stand out. Bettors should track all bets meticulously and preserve records from apps, tickets, and statements throughout the year.
They should also examine whether itemizing makes sense if losses approach winnings. Under the new IRS Tax Rules, itemizing may be the only path to claiming any gambling-loss offset at all.
Budgeting also becomes more important because the tax may apply to gross winnings rather than a bettor’s own sense of profit and loss. Someone who places a large number of wagers during the 2026 World Cup could owe federal tax even after ending the tournament with little or no economic gain.
The filing deadline for those bets is April 15, 2027, unless the taxpayer files for an extension. Consulting a tax professional may be especially important for high-volume activity.
That reflects how the rules can compound quickly. A bettor who places dozens or hundreds of wagers across group-stage matches, knockout rounds, and the final may need to reconcile taxable winnings, documented losses, itemization choices, possible Form W-2G reporting, and any withholding already taken out.
The federal rules themselves are not special to soccer or international tournaments. They mirror general sports wagering law, even though the scale and popularity of the 2026 World Cup could pull many casual bettors into a tax system they have not dealt with before.
For those casual bettors, the distinction between a tax form threshold and actual taxability may be the easiest place to make a mistake. The absence of a Form W-2G can look like a signal that nothing must be reported, but the federal rule says otherwise.
The deduction rule may prove even more surprising. Before the 2026 change, many gamblers assumed that equal winnings and losses would cancel each other out for tax purposes if documented properly; the new 90% limitation breaks that assumption.
That is the heart of the phantom-income problem. A bettor can end the year economically even and still report taxable income because the federal return recognizes all winnings but allows only a partial deduction for losses.
For sportsbook operators, the thresholds also require attention during the 2026 World Cup. They must issue Form W-2G when winnings minus wager reach $2,000 and 300 times the wager, and they must withhold 24% when winnings minus wager exceed $5,000 and meet the same multiple.
For bettors, those thresholds should not be confused with a safe harbor. They mark when sportsbooks must report or withhold, not when a taxpayer’s duty to report begins.
Every winning bet still counts. Every claimed loss still requires proof.
That leaves one clear message for anyone planning to wager on the 2026 World Cup: the tournament may bring new betting volume and attention, but the tax consequences are already defined, and under the new 90% Loss Deduction rule, even a break-even season can produce a federal bill.
