Will Trump Axe Taxes on Gambling Winnings? President Says He'll "Think About It" (Image: File)
President Donald Trump has said he is thinking about a plan to remove federal taxes on gambling winnings, affecting millions of Americans who bet on sports, play the lottery, or go to casinos. However, in brief remarks to reporters, the President provided no details, timeline, or legislative strategy, stating only that he would "have to think about" the policy change.
When asked about taxes on gambling wins aboard Air Force One, Trump pointed to his administration's previous tax cuts before hinting at a potential future move.
His exact comment was: “We have no tax on tips, we have no tax on Social Security, and we have no tax on overtime,” he said. “No tax on gambling winnings? I don’t know. I’m going to have to think about that.” This places the idea in the realm of consideration rather than an announced policy initiative. He made no mention of how such a change would be enacted or paid for.
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Under longstanding U.S. tax law, all gambling winnings—from lotteries, casinos, horse racing, and sports betting—are considered taxable income and must be reported to the IRS.
Despite Trump's speculative comments, eliminating the federal tax on gambling winnings would face significant hurdles.
Congressional Action Required: An Act of Congress, not only a presidential executive order or preference, is necessary for such a significant modification to the Internal Revenue Code.
Existing Pushback in Congress: There is a bipartisan push to reverse the OBBBA limit on gambling loss deductions. Nevada lawmakers, such as Senator Catherine Cortez Masto, have proposed restoring the 100% deduction, but the bills remain stalled.
Revenue Impact: A complete elimination of the tax would result in a significant loss of federal revenue, necessitating new levies or compensating cuts elsewhere—a difficult political task.
A: Only the federal income tax on winners would be removed. Particularly in places like Nevada and New Jersey that depend on this revenue, state and municipal taxes on gambling revenues would most likely continue to exist.
A: Under the OBBBA rules starting 2026, if you win $10,000 but lose $9,500 gambling, your real gain is $500. But since you can only deduct 90% of losses ($8,550), you’d owe tax on $1,450 ($10,000 − $8,550) of “phantom income,” not just your $500 profit.
A: Nevada’s economy relies heavily on casinos and hospitality. Tax rules that discourage gambling or impose heavy taxes on visitors—like taxing “phantom income”—are viewed as directly hurting the state’s main businesses and jobs.
A: Although not an official promise, mentioning the idea has strong political appeal in states with big gambling industries. It lets Trump show support for an important economic sector and its workers ahead of the election.
A: The most immediate and likely legislative action is a bipartisan fix to the 90% deduction cap to eliminate "phantom income." A full elimination of the federal tax on winnings is a much heavier lift and faces steeper fiscal and political obstacles, making it a longer-term, more uncertain prospect.
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