- The slot tax reporting threshold will increase to $2,000 in 2026
- The present threshold of $1,200 has stood since 1977
After months of uncertainty, the Inside Income Service (IRS) has settled the talk on whether or not a tax provision of the One Massive Lovely Invoice Act (OBBB) raised the tax reporting threshold for slot machine wins.
The IRS tax reporting threshold for slot machines to provoke a handpay raises from $1,200 to $2,000 subsequent yr. The rise comes by the use of the One Massive Lovely Invoice Act. (Picture: Reddit)
Since 1977, casinos have been required by the federal tax code to handpay slot wins for prizes of $1,200 or extra. The participant is issued a W-2G, a tax kind to report playing winnings, which is moreover filed with the IRS.
Starting Jan. 1, 2026, the edge will enhance to $2,000. The brink will then enhance yearly in perpetuity based mostly on inflation.
For calendar years after 2025, the minimal threshold quantity for reporting sure funds and backup withholding on sure info returns, together with the Kind W-2G, shall be adjusted yearly for inflation. The minimal threshold quantity for funds made in calendar yr 2026 is $2,000,” the IRS explained in a draft for W-2G filings starting in 2026.
The draft is carried out as soon as it receives ultimate approval from President Donald Trump’s Workplace of Administration and Funds, which oversees the implementation of insurance policies, budgets, administration, and regulatory targets.
Now, casinos throughout the nation should start reprogramming their slots to provoke handpays solely when a machine hits for greater than $2,000. They’ll gladly do it, because the gaming trade has for a few years mentioned the $1,200 threshold is outdated, making a burdensome workload and requiring gamers to attend for a slot attendant to ship their money winnings and full paperwork.
Slot Tax Threshold Improve
Tucked away within the Republicans’ tax and spending insurance policies package deal was a rise to 1099-MISC filers that raised the edge for reporting from $600 to $2,000. 1099-MISC varieties take care of temp staff and impartial contractors who should not staff.
It wasn’t initially clear if the procedural change to 1099-MISC utilized to W-2G. In July, On line casino.org received a maintain of the Tax Regulation Heart at NYU Regulation for clarification. Sophia Yan, an attorney-advisor on the Tax Regulation Heart who beforehand served as a tax regulation clerk on the Senate Finance Committee, instructed us:
“I agree with the studying that the slot tax reporting threshold would basically be raised from its present $1,200 threshold to $2,000 by OBBBA. Kind W-2G implements the reporting necessities within the rules at 26 CFR 1.6041-10, which outline reportable playing winnings at various thresholds above $600 relying on the kind of sport. However these rules implement Part 6041(a) of the Code, which requires reporting of ‘good points, income, and earnings’ of $600 or extra of the rules,” Yan mentioned.
“The change within the Part 6041(a) on account of OBBBA seems to re-establish a flooring of $2,000 for reporting of every kind,” Yan defined.
Wins and Losses
Whereas a rise, albeit a small one, to the slot tax threshold is welcomed by the gaming trade and its clients, one other part of the OBBB might have a extra consequential influence.
Starting subsequent yr, the invoice reduces the quantity of losses a gambler can deduct in opposition to their winnings from 100% to 90%. The gaming trade and supporters of restoring the deduction again to 100% say the change will pressure gamblers to pay federal taxes on phantom earnings, as an individual who wins $100K but in addition loses $100K at a on line casino all year long would nonetheless must pay tax on $10K.
Nevada’s congressional delegation is spearheading payments in Congress to revive the playing losses deduction.
