Trump Considers Ending Federal Taxes on Gambling Winnings

President Donald Trump has indicated a willingness to contemplate the elimination of federal taxes on gambling winnings. During a brief interaction with reporters on October 3, 2023, aboard Air Force One, he stated he would “have to think about” the current federal levy applied to gambling payouts. This remark comes as part of a broader agenda aimed at tax reductions.

Under existing U.S. tax law, all gambling income—including winnings from lotteries, casinos, and sports betting—must be reported as taxable income on Form 1040. Typically, amounts over $600 require an IRS W-2G form, and larger winnings face withholding rates of up to 24 percent. The tax structure can lead to what some are calling “phantom income,” where taxpayers owe taxes on winnings they have not retained after accounting for gambling losses.

The recent discourse around gambling taxes is influenced by the One Big Beautiful Bill Act (OBBBA), signed into law in 2025. This legislation eliminated federal taxes on certain income types, including tips and overtime pay, but it also introduced limitations on the deductibility of gambling losses. Starting from tax years after 2025, taxpayers will only be able to deduct 90 percent of their gambling losses against their winnings. This change has raised concerns among gamblers about potential tax liabilities on earnings they do not ultimately realize.

Legislative Efforts Addressing Gambling Taxation

In response to Trump’s remarks, lawmakers have introduced three pieces of legislation intended to restore the traditional 100 percent loss-offset deduction, which would eliminate the cap imposed by the OBBBA. Despite the bipartisan support for these measures, none have progressed to a vote in Congress. Notably, representatives from gambling-heavy states, such as Nevada and New Jersey, have been at the forefront of these efforts.

Senator Catherine Cortez Masto, a Democrat from Nevada, put forth a Senate companion bill that aimed for a unanimous consent vote in July, but it was blocked. The Senate Finance Committee is currently reviewing the proposal, which highlights the political significance of gambling taxation in regions where the industry plays a critical role in local economies.

While President Trump has expressed interest in the idea of eliminating taxes on gambling winnings, any significant change would require Congressional approval, indicating that discussions are still in the early stages. The prospect of federal tax relief on gambling income is especially pertinent as the 2026 election cycle approaches, making it a potent topic for political candidates and their campaigns.

As the debate continues, the implications of tax policy on the gambling industry remain a focal point for both lawmakers and the public, particularly in states where gambling contributes substantially to employment and local tax revenues.