Trump considers removal of federal gambling tax rules.

President Trump, speaking to reporters aboard Air Force One, said he would “keep the option open” when asked whether federal taxes on gambling income could be eliminated. The remark follows recent legislative actions under the One Big Beautiful Bill Act, which introduced tax exemptions on tips and overtime for workers. While the proposal is not yet formal, Trump’s comments indicate that federal gambling taxation may be reviewed as part of broader income tax reforms.

Under existing IRS regulations, gambling winnings over $600 must be reported, and amounts of $5,000 or more incur a standard 24 percent withholding rate. Higher withholding levels—up to 31 percent—may apply when adequate taxpayer information is not provided. These rules affect a wide spectrum of gambling activities, including casinos, lotteries, raffles, horse racing, and sports betting. Gambling losses may be deducted but cannot exceed total winnings.

The potential impact is substantial. According to recent data from the American Gaming Association, 57 percent of US adults participated in some form of gambling in the past year, the highest rate ever recorded. This includes 30 percent who visited a physical casino and 21 percent who placed sports bets. Any policy shift at the federal level could influence millions of recreational gamblers and reshape how winnings are taxed nationwide.

Industry stakeholders are also reviewing the implications for operators. As online gambling expands across US states, compliance frameworks are becoming increasingly fragmented. Each state maintains its own taxation model, reporting standards, and regulatory expectations. A change in federal tax policy could introduce new complexities or create opportunities for alignment.

For now, the proposal remains under consideration, but its potential reach across the gaming landscape is significant.