What percentage of gambling losses can be used to offset gambling winnings?

Gambling losses can fully offset gambling winnings for tax purposes, meaning that taxpayers can deduct their total gambling losses from their total gambling winnings on their tax return. This deduction is limited to the amount of gambling income reported; thus, if a taxpayer has $5,000 in winnings and $5,000 in losses, they can report their net gambling income as zero.

This allowance highlights the government’s recognition of the risks associated with gambling and provides a measure to ensure that taxpayers are not taxed on income that they ultimately do not retain. It is essential to maintain accurate records of both winnings and losses to substantiate the deductions claimed.

In contrast, options that suggest partial offsets, like 25%, 50%, or 75%, do not reflect the actual tax code, which permits the full amount of losses to be deducted, contingent upon reporting equivalent winnings.