Miscellaneous Provisions under the OBBBA 

The One Big Beautiful Bill Act (OBBBA), enacted this past July 4, 2025, marks a shift in U.S. tax policy, particular for gamblers and relocating workers. The OBBBA now caps wagering loss deductions and permanently eliminates deductions on moving expenses incurred by individuals relocating for a job.   

Wagering Income and Losses 

The Internal Revenue Code (the “Code”) provides that income from any source is taxable unless otherwise excluded under the Code, and this includes income from gambling winnings.  Accordingly, taxpayers may deduct gambling losses solely to the extent of their reported gambling winnings.  However, this has changed with the OBBBA.  Gambling losses are deductible only up to 90% of reported gambling winnings starting with the 2026 tax year.  Under the previous 2017 Tax Cuts and Jobs Act (TCJA), professional gamblers may deduct ordinary and necessary business expenses – while this rule remains, the new 90% cap applies to deductible expenses, as well.  The OBBBA preserves the requirement that nonprofessional gamblers itemize deductions to take advantage of the gambling loss deductions against gambling winnings.  Similarly, carryover of excess loss is not allowed under the OBBBA. 

Phantom Income: The 90% cap on deductible gambling losses and related expenses under the OBBBA introduces the risk of ‘phantom income’ – taxable income that exists despite an overall loss.  For example, if a taxpayer reports $10,000 in gambling winnings and $11,000 in losses, only $9,900 of those losses may be deducted.  This leaves $100 in taxable gambling income, even though the taxpayer actually incurred a net loss of $1,000 from wagering activities. 

Moving Expenses Generally Non-Deductible 

Under the TCJA, the deduction for qualified moving expenses was suspended for tax years 2018 through 2025, with the exception of active-duty military personnel moving under orders.  The OBBBA removes the sunset provision, effectively eliminating the deduction for most taxpayers on a permanent basis.  While the general deduction remains unavailable, exceptions continue to apply for active-duty military personnel and are newly expanded to include employees of the U.S. intelligence community, unfortunately leaving the majority of civil employees without relief. 

Impact on Employees: Under the OBBBA, as with the TCJA, reimbursement of moving costs paid to an employee is taxable income and included in the employee’s W-2 statement.  This creates a financial burden for employees who, despite receiving reimbursement, do not experience a net economic gain – they are effectively taxed on compensation that merely offsets a personal expense.  The result is a higher overall tax bill for relocating workers. 

Impact on Employers: Many companies now opt to gross up relocation payments to employees, providing additional compensation to cover the employee’s increased tax liability.  This may be beneficial to the relocating employee.  However, this raises the overall costs of relocating employees.  In industries where geographic mobility is essential, such as IT, consulting, and healthcare, these changes could influence hiring decisions, relocation offers, and even talent retention strategies. 

Conclusion 

In light of the permanent changes introduced by the OBBBA – particularly the limitations on wagering loss deductions and the elimination of moving expense deductions for most employees – it is increasingly important for taxpayers and employers to revisit their tax planning strategies.  Understanding how these provisions affect income reporting, deductions, and overall tax liability can help individuals and organizations adapt more effectively, identify and take advantage of potential tax-saving opportunities, and avoid unexpected financial consequences.  Whether through adjusting withholding, exploring alternative benefits, or consulting with tax professionals, proactive planning will be key to navigating the new landscape.