Can you tax write off lottery losses?
Yes, but most lottery players can't use it, and as of the 2026 tax year it is worth less than it used to be. Federal tax law lets you deduct gambling losses, including losing Powerball, Mega Millions, and scratch-off tickets, only against gambling winnings and only if you itemize. A 2025 federal law, the One Big Beautiful Bill Act, added a new limit. For tax years starting after December 31, 2025, the deduction equals 90% of your losses, still capped at your winnings.
Here is how the rules work together. All lottery and other gambling winnings are taxable income, whether or not you get a tax form for them. Losses from every kind of wagering in the year, including lottery tickets, casino play, and sports bets, are added up. You can deduct 90% of that total, but never more than you won. Losses beyond your winnings can't be carried to next year. And the deduction goes on Schedule A as an itemized deduction, so it only helps if your itemized deductions add up to more than the standard deduction, which for 2026 is $16,100 for single filers, $24,150 for heads of household, and $32,200 for married couples filing jointly.
| Your year | Winnings | Losses | Deduction before 2026 | Deduction for 2026 | Winnings still taxed |
|---|---|---|---|---|---|
| Hit a $50,000 Powerball prize, spent $3,000 on tickets | $50,000 | $3,000 | $3,000 | $2,700 | $47,300 |
| Broke even | $10,000 | $10,000 | $10,000 | $9,000 | $1,000 |
| Lost more than you won | $2,000 | $5,000 | $2,000 | $2,000 | $0 |
| Small wins, regular play | $500 | $1,040 | $500 | $500 | $0 |
The table assumes you itemize. In the first row, 90% of $3,000 is $2,700, so $47,300 of the prize stays taxable. In the break-even row, the 90% cap leaves $1,000 taxed even though the player came out even. In the last two rows, losses are big enough that the cap on winnings, not the 90% rule, sets the deduction. The last row is a $20-a-week habit, $1,040 a year, with $500 in small prizes. If that player takes the standard deduction, as most households do, the $500 is taxable and none of the losses count.
The same law raised the point at which a lottery sends you a Form W-2G. For prizes paid in 2026, the threshold is $2,000, up from $600, and the prize must also be at least 300 times the ticket price, according to the Internal Revenue Service. That changes the paperwork, not the tax. A $1,000 prize with no form is still income. Lotteries withhold 24% for federal tax when a prize, minus the ticket cost, is more than $5,000, and many states withhold too. Our look at taxes by prize size and the lottery tax calculator show what that means in each state.
To claim losses, the IRS says you need a diary or similar record of winnings and losses, backed by tickets, receipts, or statements. For lottery players, that usually means keeping losing tickets with the dates, or the purchase history from a state lottery app or online account. State income tax rules on gambling losses differ from the federal rules, so the 90% figure applies to your federal return. We covered the scratch-off side in an earlier guide to scratch-off losses.
Sources
26 U.S. Code § 165 (d), Wagering losses
Frequently Asked Questions
Can you deduct lottery tickets you lost on?
Yes, but only if you itemize deductions and only up to the amount of gambling winnings you report. Starting with the 2026 tax year, federal law allows just 90% of losses, so $1,000 in losing tickets counts as $900.
Do I need to itemize to deduct lottery losses?
Yes. Gambling losses are an itemized deduction on Schedule A. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, so losses only help if your total itemized deductions beat those amounts.
What records do I need to deduct lottery losses?
The IRS says to keep a diary or similar record of winnings and losses, along with tickets, receipts, or statements. Keeping losing lottery tickets, plus win and loss statements from online lottery accounts, helps support the deduction.
Jessie Jurado is a news writer who covers new scratch-off launches, state lottery guides, taxes on winnings, news, and much more. She joined ScratchCheck in 2026 and writes the site's state-by-state coverage.
