IRS Confirms Higher Jackpot Reporting Threshold

The entire casino industry, along with millions of slot machine enthusiasts, has been holding their breath since passage of the so-called “One Big Beautiful Bill Act of 2025.”

Prior to the legislation, casinos were required to issue a form W-2G when a slot jackpot was $1,200 or more. The legislation seemed to increase the threshold to $2,000, but until now, casinos and players have been in limbo because the IRS wouldn’t confirm the change.

Emphasis on “until now.” The IRS has removed its head from its ass and the jackpot reporting threshold will be $2,000 starting Jan. 1, 2026. Otherwise known as the Best New Year’s Eve, ever.

How the IRS Clarified the Change

LFG! Sorry about the vulgar language, Mom, but this is a very big deal.

The IRS confirmed the reporting threshold change via a clarification on its website in the form of a draft tax form. There is a specific draft related to W-2G forms, aimed in part at clarifying matters for less-informed outlets.

So, it’s “official,” but will only be “official-official” when the Office of Management and Budget (OMB) approves it. In this case, approval is expected to be a formality.

You can keep your lame Mona Lisa and aurora borealis, this is true beauty.

Interesting side note: “For calendar years after 2025, the minimum threshold amount for reporting certain payments and backup withholding on certain information returns, including the Form W-2G, will be adjusted yearly for inflation.” The article’s advice is not to hold your breath.

Operational Impact on Casinos and Slot Machines

But $2,000!

All the casino owners and operators mentioned in the article are implementing the change, which was not the case even a week earlier.

It is now a race to update their casino operations procedures along with making changes to literally every slot machine in their venues.

It is expected the changes to the machines will not happen by Jan. 1, so that will mean machines will still “lock up” at $1,200, but no W-2G will be issued. Attendants will just manually override the system.

The change to the reporting threshold has been a long time coming. The $1,200 threshold was set in 1977, otherwise known as “a metric shit-ton of years ago.”

The IRS reporting threshold should be about $6,600 if indexed for inflation, but the article notes there is little appetite to complain given that a hefty chunk of the author’s personal handpays fall into the sweet spot of between $1,250 and $2,000.

Handpay Data and Player Experience

Extrapolating from personal handpays in 2025, the article estimates roughly 65% of handpays fall between $1,200 and $1,999. It notes 131 handpays in 2025 to date, 86 of which were below $2,000, and comments that it costs about $2,500 to get a $1,250 handpay.

So, while taxes will still be paid on all gambling winnings, as required by law, the key benefit highlighted is that gaming will no longer be interrupted as frequently by IRS paperwork.

The increase in reporting threshold is likely to have some fallout for casino staff. Fewer handpays means less need for attendants, which is likely to result in downsizing of that department. The article expresses hope that attendants can be trained as techs or in other roles, noting that attendants are some of the writer’s favorite people.

Beyond that, slot attendant tips are likely to take a nosedive. Fewer handpays mean fewer tips. They are already taking a hit due to “fast pay” systems where players provide their tax information to the casino, then bypass handpays by entering a PIN when the machine locks up and collect all their W-2Gs at the end of the session.

Broader Revenue and Policy Implications

Anyway, the article urges readers to stay focused on the positive and emphasizes that the IRS threshold for slot jackpots is increasing to $2,000.

This news is described as so spectacular that it warrants Googie stars.

Yes, the country is going to lose a lot of revenue, but the article suggests it will be made up for in other ways.

Which leads to another subject where the tone tries to stay positive, but it involves what the writer calls dumbassery.

New Limits on Gambling Loss Deductions

The next challenge for public officials and the IRS is another provision of the One Big Beautiful Bill Act. Beginning with the 2026 tax year, gamblers will be limited to deducting only 90% of their gambling losses against their winnings, rather than 100% as allowed under prior law.

This is described as a major issue for the casino industry. It only affects gamblers who itemize deductions on their tax returns, but those are some of the industry’s best players.

Under the old rules, a gambler who won and lost the same amount over the course of a year could effectively net out to zero taxable gambling income; under the new rule, that same gambler could owe tax on so-called “phantom income,” meaning income that exists on paper but not in reality.

A common example given is someone with $100,000 in winnings and $100,000 in losses. If the new law goes into effect, the player would only be allowed to deduct $90,000, leaving $10,000 subject to tax despite having no actual profit.

Faced with that prospect, gamblers are either going to be forced to fluff up their losses 10%, or they are going to gamble less. That last part is what is freaking out the casino industry.

Celebration for Now, Concerns for the Future

But that is framed as an issue for another time.

For now, the article celebrates the fact the IRS reporting threshold is going up to $2,000.

The writer describes being thrilled just typing that sentence, especially after months of uncertainty.

For readers wondering why they should care if they have never gotten a handpay or W-2G, the article offers advice distilled down to two words: uncomfortable denominations. The higher the denomination, generally, the lower the hold on the machine. The bulk of the 2025 handpays referenced were due to playing $10 per hand ($1 denomination) or $25 per hand ($5 denomination) video poker. Those who want to stay off the radar of the IRS are advised to keep playing penny machines, which are described as the biggest money-makers for casinos.

A key highlight is that the $25 four-of-a-kind on video poker no longer triggers a W-2G, with the note that the bulk of the referenced handpays that year were $1,250.

The article closes with a commitment to hitting a jackpot under $2,000 on New Year’s Eve just to be able to personally testify to the boundless wisdom of elected leaders and the Internal Revenue Service, while adding the caveat that actual results may vary in terms of wisdom.