Will Trump eliminate taxes on gambling wins? Here's the latest on POTUS' plans

chair Donald Trump said this week that he would consider eliminating federal taxes on gambling winnings. However, he offered no concrete plan or timeline.

When asked about taxes on gambling wins by reporters aboard Air Force One, Trump left the possibility open, saying he would “have to think about” ending the current federal tax applied to gambling payouts.

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Gambling income, including winnings from lotteries, raffles, horse races, casinos, and sports bets, is currently required to be reported as taxable income on Form 1040, with amounts deducted automatically in many situations.

Under current U.S. Tax law, all gambling winnings must be reported on federal tax returns, and amounts exceeding $600 typically trigger an IRS W-2G form, while larger winnings can face withholding rates of 24 per cent or more.

In 2025, Trump signed the One Big Beautiful Bill Act (OBBBA), the new tax bill that already eliminated federal taxes on certain types of income, such as tips and overtime pay. In the brief exchange with the media, Trump said, “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.”

However, under the new OBBBA tax regime, taxpayers will be able to deduct only 90 per cent of their gambling losses against their winnings for federal income-tax purposes beginning with tax years after 2025. This means a gambler who wins money and loses money in the same year could still owe tax on income they never actually kept. This income is being dubbed as “phantom income”

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Lawmakers have responded by introducing three different pieces of legislation that would reinstate the conventional 100% loss-offset deduction and remove the OBBBA's 90% cap. But none have made it to a vote.

Even before Trump’s recent remarks, there was a bipartisan effort in Congress to push back against changes in federal gambling tax treatment. These were led by representatives from gambling-heavy states like Nevada. A Senate companion bill was submitted by Nevada Democrat Senator Catherine Cortez Masto. She tried to use unanimous consent to pass her legislation in July, but it was thwarted. The Senate Finance Committee is still considering the bill.

Even though Trump said he will “think about it”, the actual elimination of federal taxes on gambling winnings would require approval from Congress, not just presidential preference.

In states like Nevada and New Jersey, where gambling sectors contribute significantly to local employment and tax revenue, even the suggestion of federal tax relief can become a politically potent topic for candidates and campaigns as the 2026 elections approach.

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