Facilitating Useful Loss Limitations to Help Our Unique Service Economy (FULL HOUSE) Act
- Sponsor
- Sen. Cortez Masto, Catherine [D-NV]
- Committees
- Finance Committee (primary)
- Last action
- Jul 9, 2025
Bottom line
This bill reinstates and clarifies the tax rule that limits the deductibility of gambling losses and associated expenses to the amount of gambling winnings, effective for tax years starting in 2026.
What it actually does
This bill amends Section 165(d) of the Internal Revenue Code of 1986 to explicitly reinstate that losses from wagering transactions, including any deductions incurred in carrying on such transactions, are only allowed to the extent of gains from such transactions. This change clarifies and restores the pre-Tax Cuts and Jobs Act (TCJA) interpretation of the law regarding the deductibility of gambling losses and related expenses. The amendments will apply to taxable years beginning after December 31, 2025.
Section 2(a)
Reinstatement of Rules for Wagering Losses
This section amends the Internal Revenue Code to clearly state that if you gamble and lose money, you can only deduct those losses up to the total amount of money you won from gambling. This limitation also applies to any expenses you incurred while engaging in wagering transactions, such as travel costs to a casino or other related fees. For example, if a taxpayer wins $1,000 but loses $1,500 and spends $200 on gambling-related travel, they can only deduct $1,000 of the combined $1,700 in losses and expenses.
Section 2(b)
Effective Date
This provision specifies that the changes made by the bill will take effect for tax years beginning after December 31, 2025. This means that the reinstated rules for deducting wagering losses will apply to income earned and losses incurred starting from January 1, 2026, impacting tax returns filed for the 2026 tax year and subsequent years.
The bill explicitly states that the term 'losses from wagering transactions' includes 'any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.' This clarifies that expenses related to gambling activities, such as travel or other costs, are also subject to the limitation that they can only be deducted up to the amount of gambling winnings.
Section 165(d) of the Internal Revenue Code of 1986, as amended by Section 2(a) of the bill
Why it matters:This is a technical clarification designed to ensure comprehensive application of the tax rule and prevent potential ambiguities or loopholes regarding related expenses. It reflects standard legislative practice for precision in tax law.
Case for: Supporters would argue this ensures a consistent and fair application of the wagering loss limitation, preventing taxpayers from deducting gambling-related expenses beyond their winnings, which aligns with the intent of limiting net gambling losses. It closes a potential avenue for taxpayers to reduce their taxable income through gambling expenses.
Case against: Critics might contend that this strict interpretation could disproportionately affect professional gamblers or those with significant legitimate business expenses related to their wagering activities, as it limits their ability to offset these costs against other income, even if their overall gambling enterprise is not profitable.
Estimated impact: Clarifies the tax treatment for an unknown number of taxpayers who incur expenses related to wagering, potentially increasing their taxable income if their expenses exceed their gains and they previously sought to deduct these expenses against other income.