Details of Public Law 119-21, section 70114 , One Big Beautiful Bill Act

This provision makes permanent the federal clarification that the limitation on losses from wagering transactions applies not only to the actual costs of wagers incurred by an individual, but to other expenses incurred by the individual in carrying on any wagering transaction established under the Tax Cuts and Jobs Act (Public Law 115-97, section 11050). This provision also limits wagering losses sustained on wagering transactions to 90 percent of the amount of losses and only to the extent of the gains during the taxable year from such transactions, for taxable years beginning after December 31, 2025.

Under the PITL, California generally conforms to IRC section 165 relating to the deduction for losses as of the specified date, January 1, 2025, under block conformity pursuant to RTC section 17201, but does not conform to the clarification or limitation of the deduction made under the Tax Cuts and Jobs Act or this federal provision. As a result, California does not conform to the changes made by this provision.

As a result, California does not conform to the changes made by this provision.

The estimated revenue impact to conform to the above provisions would result in the following gain:

26/27 27/28 28/29 29/30 $5,000,000 $5,600,000 $5,800,000 $6,100,000