The update should simplify things for players who enjoy the casino without chasing massive jackpots
A quiet change from the Internal Revenue Service could bring some relief to casino players, especially those who frequent slot machines. Beginning in 2026, the IRS will raise the minimum jackpot that triggers mandatory pay and tax withholding from $1,200 to $2,000. The old limit had been unchanged since the late 1970s.
For many gamblers, the update means fewer interruptions on the casino floor and fewer tax forms tied to modest wins. Slot players in particular often hit payouts just over the old threshold, which required staff involvement and automatic reporting even when the win didn’t reflect an overall profit.
The timing of the change matters because it comes alongside far less popular tax news. A separate federal law limits gamblers to deducting only 90% of their losses against winnings. That rule, scheduled to apply in future filings, could leave some players owing taxes even if they lost money over the year.
Lawmakers are still working to roll back that loss-deduction rule, and optimism remains that it could be reversed before it takes effect. Even so, the higher handpay threshold offers a small counterbalance for casual players who may not keep detailed records of every bet.
Mandatory withholding exists largely because the IRS assumes significant profits usually come from large wins. When a payout crosses a set line, casinos are required to report it and hold back taxes. Players who want to recover any of that money must later document their full gambling activity.
