President Donald Trump signalled on 9 December (Tuesday) that he is open to eliminating federal taxes on gambling winnings, a move that would broaden his administration’s efforts to reduce taxes on everyday income, following recent cuts on tips and overtime.
Speaking to reporters during an Air Force One gaggle, as reported by Fox Business, Trump said he would “keep the option open” when asked whether he might remove the longstanding federal tax requirement on gambling earnings. “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 gonna have to think about that.”
Move follows recent cuts on tips and overtime
The comments come months after Trump signed the One Big Beautiful Bill Act (OBBBA), which included provisions for “no tax on tips” and “no tax on overtime,” enabling workers to claim new reductions on their income.
According to the American Gaming Association, nearly 60 percent of US adults gambled in the last year, with 30 percent visiting a physical casino and 21 percent placing sports bets. The proposal, if pursued, could significantly impact a large portion of the population.
Current IRS rules: How gambling winnings are taxed
When speaking again on the matter Tuesday, Trump noted he would “think about” potential tax changes on gambling earnings. Under current IRS rules, anyone who wins over $600 typically receives a W-2G form, and gambling winnings of $5,000 or more are subject to a standard 24 percent withholding rate. This applies to lotteries, raffles, horse races, casinos and other forms of gambling.
Federal withholding can reach as high as 28 percent on prizes exceeding $5,000, and up to 31 percent if the winner fails to provide a Social Security number. All gambling income must be reported on a Form 1040. While gambling losses can be deducted, they cannot exceed total gambling winnings for the year.
The discussion around gambling taxes follows a highly publicised jackpot in Nevada in October 2025, when a casino guest won over $1 million on a $3 “Wheel of Fortune” slot machine spin.
Potential impact on millions of US gamblers
According to recent research from the American Gaming Association (AGA), 57 percent of US adults participated in some form of gambling over the past 12 months, marking the highest engagement levels ever recorded. Among those, about 30 percent visited a physical casino, and 21 percent placed a sports bet in the past year. The high level of participation demonstrates the potential impact of any change to federal tax policy on gambling, particularly for millions of recreational bettors and potentially many recreational winners.
Taxation in the US gaming industry has long been a complex issue, but for iGaming operators, it’s becoming increasingly nuanced. As more states legalise online gambling, operators face another set of tax rules, compliance hurdles, and reporting standards to figure out. There’s no single template for tax laws anymore. Every state demands its own playbook. Unlike Europe, where gambling taxation follows a relatively centralised structure, the US operates on a state-by-state basis. There’s no standard playbook. One state may hit you with steep taxes, another with fees, and all expect different reports on your revenue.
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