- President Donald Trump considers removing federal taxes on gambling winnings.
- Current rules impose tax forms and withholding on gambling winnings over $600 and $5,000.
- The removal of gambling taxes would follow recent tax breaks on tips and overtime.
- Economists caution that reduced tax revenue may not be fully offset by other income sources.
US President Donald Trump indicated this week that he is evaluating the possibility of eliminating federal taxes on gambling winnings. He made the statement while speaking to reporters aboard Air Force One on Tuesday when asked about removing this specific tax category. “We have no tax on tips, we have no tax on Social Security, and we have no tax on overtime. No tax on gambling winnings, I don’t know. I’m gonna have to think about that,” he said.
Currently, federal law requires gambling winnings above $600 to be reported via a W-2G form issued by casinos or gambling operators. For reported winnings of $5,000 or more, the Internal Revenue Service (IRS) mandates a 24 percent withholding rate, which can increase to 28 percent or 31 percent under certain conditions. Removing taxes on gambling winnings would eliminate this reporting process and the related taxes.
This proposal would extend the recent tax changes introduced by Trump, such as the removal of federal taxes on tips and overtime pay, under provisions in the One Big Beautiful Bill Act. Since his election, Trump has pledged to cut or even eliminate income taxes while balancing the budget through increased revenue from other sources. He has stated, “Over the next couple of years, I think we’ll substantially be cutting—and maybe cutting out completely—income tax. We could be almost completely cutting it because the money we’re taking in is going to be so large.”
However, economists and fiscal experts warn that the loss of tax revenue from gambling winnings could negatively affect the US budget. The gambling industry is a growing sector in the US economy, and reducing these taxes may cause considerable revenue deficits unless adequately compensated by other income. Reports also show conflicting assessments of the savings generated from existing tax cuts and tariffs.
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