First increase since 1977 welcomed by casinos as long-awaited modernisation of W-2G reporting rules
The US Internal Revenue Service (IRS) has formally confirmed that the revised tax reporting threshold for slot machine jackpots will come into effect on 1 January 2026, ending months of uncertainty for land-based casino operators and players.
Under the updated rules, casinos will be required to issue a W-2G tax form only when a slot machine win reaches or exceeds $2,000. This represents an increase from the long-standing threshold of $1,200, which had remained unchanged since it was introduced in 1977. The change forms part of the implementation of the One Big Beautiful Bill Act, which was passed earlier this year and includes a series of tax-related adjustments.
While casino operators were informed in July that the threshold would be raised, the IRS had not previously specified the precise timing of the change. That clarity arrived on 8 December, when the agency published updated guidance in the “What’s New” section of its instructions for filing Form W-2G. The guidance confirmed that, for calendar years after 2025, the minimum reporting threshold for certain gambling payments would be adjusted annually for inflation, with the threshold for payments made in 2026 set at $2,000.
The W-2G requirement applies when a player records a qualifying win on a slot machine, triggering mandatory reporting and, in some cases, backup withholding. In practical terms, hitting the threshold often results in the machine being shut down for verification and paperwork, a process that can take up to 45 minutes and disrupt both the player experience and casino floor operations.
The increase marks the first adjustment to the slot jackpot reporting threshold in nearly five decades and has been strongly supported by industry stakeholders. The American Gaming Association (AGA) has repeatedly called for reform, arguing that inflation had rendered the $1,200 limit outdated and burdensome for both operators and customers.
Chris Cylke, Senior Vice President of Government Relations at the AGA, welcomed the confirmation, describing the change as “a long-overdue modernisation that reduces regulatory burdens and improves the customer experience.” The AGA has previously advocated for an even higher threshold, suggesting levels of up to $5,000 for certain forms of gambling, including slots, horse racing and keno.
Despite the federal confirmation, casinos may still face delays in implementation. State gaming and tax authorities must update their own regulations to align with the new federal threshold, a process that could vary significantly by jurisdiction. Until those changes are enacted, some casinos may continue operating under existing state-level requirements.
Nevertheless, the IRS announcement provides long-sought certainty and sets the stage for a more streamlined and contemporary approach to gambling tax reporting from 2026 onward.
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