Trump Considers Eliminating Federal Tax on Gambling Winnings: What You Need to Know

President Donald Trump said he would consider ending federal taxes on gambling winnings. He made the statement this week while speaking with reporters. The brief exchange occurred aboard Air Force One.

Trump offered no concrete plan or timeline for the potential change. He framed it alongside recent tax cuts on tips and overtime pay. His comments have ignited discussion within the gambling and political sectors.

Current U.S. Rules on Gambling Income

All gambling winnings are currently taxable as income by the IRS. This includes money from casinos, lotteries, sports bets, and horse races. Winnings over $600 typically trigger a tax form.

A 24% federal withholding rate often applies to larger payouts. Gamblers can deduct losses, but only up to the amount of their winnings. According to Reuters, this system has long been standard practice.

The landscape shifted with the recent One Big Beautiful Bill Act. This new law, signed in 2025, changed deductions. Starting after 2025, only 90% of gambling losses can be deducted against winnings.

This creates potential “phantom income” for taxpayers. They could owe tax on money they never actually kept. The change has prompted immediate pushback from lawmakers in gaming states.

Significant Legislative Hurdles Remain

Eliminating the federal tax would require an act of Congress. It cannot be done by presidential preference alone. This is a key point often missed in initial reactions.

There is already bipartisan legislative effort against the new 90% cap. Bills in both the House and Senate aim to restore the full loss deduction. A Senate bill was proposed by Nevada Democrat Catherine Cortez Masto.

Her attempt to pass it by unanimous consent failed this past July. The legislation remains under review by the Senate Finance Committee. The road to any tax change is long and uncertain.

The topic holds weight in states with large gaming industries. In Nevada and New Jersey, it directly impacts local jobs and state revenue. Trump’s comments may influence the 2026 election cycle in these areas.

The idea of eliminating the federal tax on gambling winnings is now part of the national conversation. While politically popular in some regions, it faces a steep legislative climb. Any change would reshape the financial calculus for millions of American gamblers.

Info at your fingertips

Q1: What did President Trump actually say about gambling taxes?

He said he would “have to think about” ending the federal tax on gambling winnings. He made the remark informally to reporters. He provided no specific policy details or timeline.

Q2: How are gambling winnings taxed right now?

All gambling income is subject to federal tax. Winnings over $600 usually require a special IRS form. A 24% withholding rate is common for significant payouts from establishments.

Q3: What is the “phantom income” issue?

It refers to owing tax on money you didn’t keep. Under a new 2025 law, you can only deduct 90% of losses. This means you could be taxed on 10% of winnings you later lost.

Q4: Could Trump eliminate this tax by himself?

No, he cannot. Changing the federal tax code requires legislation passed by Congress. The president’s role would be to sign or veto a bill that reaches his desk.

Q5: Is there support in Congress for changing this tax?

Yes, there is bipartisan support, especially from states with gaming. Multiple bills have been introduced to reverse the new deduction limit. Their progress through committee has been slow so far.

Q6: Why is this a big issue for states like Nevada?

The gambling industry is a major employer and source of state tax revenue. Changes to federal tax treatment can directly affect customer behavior and industry health. Local politicians are highly attuned to this issue.