US President Donald Trump said on Tuesday that he might consider ending federal taxes on gambling winnings, as part of his administration's efforts to cut taxes across the board, including on tips and overtime. According to Fox Business, when asked about the possibility during a briefing on Air Force One, Trump said, “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.”
Broader Tax Reforms Under Discussion
Trump's comments on gambling taxes align with a larger plan to revamp the US tax system, following recent legislative measures such as the One Big Beautiful Bill Act (OBBBA), according to a Newsweek report. With a large proportion of Americans engaging in gambling each year, changes to the taxation of winnings could have significant consequences for taxpayers, federal revenues and the deficit.
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Newsweek states that the Trump administration's ongoing push for major tax reductions, including proposals to eliminate income tax, has sparked debate among economists and policymakers about the practicality and financial impact of such measures.
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The One Big Beautiful Bill Act
The OBBBA, signed into law over the summer, introduced key provisions, including “no tax on tips” and “no tax on overtime”, giving taxpayers new relief opportunities. The American Gaming Association reports that nearly 60% of American adults gambled in the past year, with 30% visiting physical casinos and 21% placing sports bets, according to Fox Business.
Current Tax Rules On Gambling Winnings
Under current rules, anyone winning over $600 receives a W-2G form. For winnings of $5,000 or more, the IRS requires a withholding of 24%. This applies to lotteries, raffles, horse races, casinos and similar activities.
For federal tax purposes, up to 28% of the prize can be withheld if winnings exceed $5,000, and the rate rises to 31% if the gambler does not provide a social security number.
All gambling income must be declared on Form 1040. Although gambling losses can be deducted, they cannot exceed the total gambling winnings for the year.
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