Trump Hints at Abolishing Tax on Gambling Winnings
President Donald Trump said he is considering removing the federal tax on gambling winnings.
Speaking to reporters on Air Force One, the president said he would "have to think about" whether to eliminate the federal tax on gambling payouts, drawing immediate attention from lawmakers, industry groups and tax experts. The remark was noncommittal, and no legislative text or timetable was provided by the White House. The comment follows other tax-policy proposals floated by the administration this year and comes as federal budget deficits remain a central concern for economists and policymakers.
Under current tax practice, many gambling proceeds must be reported to the Internal Revenue Service and certain large prizes are subject to withholding. Taxpayers can generally deduct documented gambling losses against winnings when they itemize deductions. States maintain separate rules, and many continue to tax gambling income, meaning a federal change would not automatically eliminate all tax obligations for winners.
Industry trade bodies and casino operators reacted cautiously. Some executives said removing the tax could be marketed as a consumer-friendly change, while others warned it would offer only marginal benefits to most recreational players and could complicate reporting systems. The American Gaming Association and leading operators have not called for sweeping federal exemption but have pressed for simplified reporting and clearer rules for online and mobile wagering.
Tax-policy analysts emphasize the fiscal trade-offs.
Removing the federal tax on gambling winnings would reduce a discrete source of revenue that currently helps offset other spending. Depending on how Congress frames it, the change could disproportionately benefit large prize winners and raise equity questions. The fiscal cost could run into the low billions annually, and it's not clear this would stimulate meaningful growth in the gambling sector."
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Beyond revenue, lawmakers would need to weigh administrative and legal consequences. Rachel Morales, a former IRS official and tax attorney, cautioned that "even if federal withholding were removed, gamblers would still have an obligation to report income on their federal returns, and states may continue to withhold. The administrative headaches and opportunities for tax avoidance would be significant considerations for policymakers."
University researchers and gaming economists say the behavioral impact may be limited. "From a behavioral standpoint, eliminating taxation on winnings is unlikely to change most people's gambling habits", said Dr. Michael Reynolds, professor of economics at the University of Nevada, Las Vegas. "For many, gambling is recreational; taxation is rarely the deciding factor. However, the symbolic signal from Washington could affect investor sentiment in casinos and online operators, particularly if paired with other regulatory changes."
Congress would have to act to remove federal taxation; at present, no bipartisan bill aimed specifically at exempting gambling winnings from federal income tax has been introduced. That means any real change would require debate in both the House and Senate, committee review, and agreement on offsets or alternative revenue sources. The White House offered no plan for how a repeal would be paid for or how it would interact with state tax regimes.
For now, the statement is likely to remain a political talking point. Lawmakers from both parties may seize on the idea for campaign messaging, while tax committees in Congress and independent budget analysts will continue to stress the need for a clear accounting of costs before advancing any legislative proposal.
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