IRS jackpot limit for slots increases, yet uncertainty persists over the exact timeline.
Las Vegas Review-Journal: Changes Afoot for Slot Machine Jackpot Reporting Thresholds
In a significant shift for the casino industry, the Internal Revenue Service (IRS) is set to update its rules regarding the reporting of slot machine jackpots, following the passage of the "One Big Beautiful Bill Act" on July 4, 2025.
The Act, which has revised IRS Code Section 6041, has increased the reporting threshold for slot machine jackpots. Starting from 2026, the new threshold will be set at $2,000, marking a notable rise from the current $1,200 threshold that has been in place since 1977.
From 2027 onwards, the threshold will be indexed to inflation, meaning it will adjust annually to keep pace with the cost of living. This means that casinos will no longer be required to issue IRS Form W-2G or shut down machines at jackpots below $2,000 once the new rules are implemented.
However, as of July 2025, the IRS has yet to issue the new rules or guidance, so the updated threshold will take effect once the IRS publishes these updates.
Here's a summary of the changes:
- Before 2026: Reporting threshold for slot jackpots is $1,200.
- Starting in 2026: New threshold is $2,000.
- From 2027 onwards: Threshold is indexed to inflation.
The exact date when the IRS will finalize and enforce the updated rules is yet to be determined, but the law's provision officially begins in 2026. This change primarily affects the current $1,200 threshold that triggers W-2G tax forms for slot jackpots.
The interpretation of the increase in the threshold for reporting slot machine jackpots to the IRS is based on the perspective of people close to the casino industry. It is expected that this change will bring relief to both casinos and players, streamlining the reporting process and reducing the number of small, low-impact jackpots that require reporting.
As always, it is advisable for individuals to consult with a tax professional to understand how these changes may affect their specific circumstances.
Casinos will no longer be required to issue IRS Form W-2G for slot machine jackpots exceeding $2,000 starting from 2026, as the Internal Revenue Service has increased the reporting threshold for such jackpots, following the passage of the "One Big Beautiful Bill Act" in 2025. This change may bring relief to casinos and players alike, as it simplifies the reporting process and reduces the number of small, low-impact jackpots that require reporting, including casino-games like slots.
