Super Bowl Sunday on Feb. 8 is the day U.S. football fans, and even those who don’t follow the sport, have been awaiting. The Internal Revenue Service is part of that anticipatory group, since it will collect on some of the millions that the annual National Football League championship game will generate.
That includes taxes on not only the playoff paychecks of the NFL’s players and coaches, but also on the proceeds from the ever-increasing bets on the big game.
Most folks, however, aren’t thinking about taxes as Super Bowl LX approaches.
Fans of the Seattle Seahawks and New England Patriots simply want to cheer their teams to victory.
Music lovers who’ve once again made singer-songwriter Bad Bunny the global streaming leader are eager to see the history-making Grammy winner’s halftime performance.
Advertisers are counting on people tuning in to the broadcast to see the expensive television commercials created for the event. That is, if they haven’t already got a sneak peak of some released early.
And, yes, there’s a tax-related ad this year. Adrien Brody brings the unwanted-by-TurboTax drama.
Finally, there are the aforementioned gamblers, who are already placing their bets.
Big game, big bets, big money: The NFL’s annual championship game is the biggest single betting day of the year. The American Gaming Association (AGA) estimates that U.S. bettors will place a record $1.76 billion in legal bets on Sunday’s game at Levi’s Stadium in Santa Clara, Calif.
“No single event brings fans together like the Super Bowl, and this record figure shows just how much Americans enjoy sports betting as part of the experience,” said Bill Miller, American Gaming Association President and CEO. “By choosing legal, regulated sportsbooks, fans are having fun while supporting a safe and responsible market.”
But, notes the AGA, the process this year is complicated by the growing prediction markets. A new study from the national trade group that represents the U.S. casino industry shows that prediction markets are confusing consumers by promoting sports betting as an investment rather than entertainment. This raises concerns among the AGA about how these products are marketed and their lack of responsible gaming tools.
It also could confuse people when it comes to taxes.
Pay tax on your winnings: The Internal Revenue Service, however, is clear about the tax implications of winnings, be they from sports bets or prizes. You owe tax on the payouts, since these amounts are legally considered taxable income.
The IRS’ job in this area was made a bit easier in 2018. That’s when the U.S. Supreme Court ruled that all states have the right to legalize and launch sports betting through regulated apps.
Since then, 38 states, the District of Columbia, and Bad Bunny’s native Puerto Rico have done just that, offering some form of legal sports betting. Sunday’s 60th Super Bowl will the eighth NFL championship game since the high court’s decision.
And, as the AGA notes, with more people turning to legitimate betting outlets to place wagers, the IRS gets notice of the winnings. Gambling establishments generally collect bettors’ personal data, including a tax identification number (usually your Social Security number) and share it and winning specifics with the IRS via Form W-2G.
This required third-party reporting means the tax agency will know if you don’t include the earnings on your Form 1040.
So, if Lady Luck was on your side in 2025 when it came to bets, be sure to including the amounts on your tax return this year. That includes winnings that were too small to trigger the reporting requirement.
You can read about how to comply with your gambling winnings filing in my earlier post on reporting all your income, including gambling winnings, on Form 1040 Schedule 1.
Gamblers losing a tax break in 2026: When reporting your gambling winnings on your 2025 returns, you can reduce the amount by your losing bets. If your luck (or team) was bad, you could conceivably zero out your winnings with countering losses.
But this is the last time that option will be available.
A provision in the One Big Beautiful Bill Act (OBBBA), the massive Trump administration policy and tax bill, limits the amount of losses gamblers can claim starting in 2026. Now, only 90 percent of gambling losses can be used, meaning these filers will owe some tax on winnings.
This change will apply to all gamblers and related gambling expenses, not just professional gamblers.
As soon as the OBBBA became law, some lawmakers moved to restore the 100 percent deduction for gambling losses. Leading the way are, not surprisingly, Nevada’s Rep. Dina Titus and Sen. Catherine Cortez Masto, both Democrats.
Their measures didn’t advance in their respective Congressional chambers last year, but they say they will continue the fight. Keep an eye on Capitol Hill and the ol’ blog for updates.
Also be sure to keep records of all your gambling winnings and losses this year.
Regardless of whether the OBBBA gambling deduction limit stands or is reversed, you’ll still have to report, and claim allowable deductions against, your 2026 gambling winnings next year.
