Congress Votes This Week on Gambling’s “Phantom Income” Tax and a Crypto Tax Overhaul, on the Same Day

Two significant tax bills are heading to a House committee vote on the same day this week. One fixing a real, widely-criticized problem in how gambling losses get taxed, the other overhauling crypto tax rules. They’re not related by subject matter, but they’re connected by one specific lawmaker sitting at the center of both.

The gambling problem: taxed on money you never actually made

Starting January 1, 2026, a provision buried in last year’s major federal tax legislation (the “One Big Beautiful Bill Act”) cut the gambling loss deduction from 100% to 90%. That sounds like a minor technical change, but it creates a real, absurd result tax professionals have started calling “phantom income.”

Here’s how it works:

If you won $100,000 gambling over the year and also lost $100,000:

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