President Donald Trump suggested he may weigh changes to how the federal government taxes gambling winnings, raising the possibility while speaking with reporters during an Air Force One gaggle on Tuesday. His remarks came as his administration continues to advance its wider effort to cut taxes on various forms of individual income.
“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.” He added that he would “keep the option open” when asked whether federal taxation of gambling prizes might be reconsidered.
The discussion emerged only months after Trump approved the One Big Beautiful Bill Act (OBBBA) over the summer. That law introduced new exemptions for workers by creating “no tax on tips” and “no tax on overtime” provisions. The administration has framed the changes as part of a broader attempt to lighten tax burdens tied to everyday earnings.
Gambling Participation and Potential Impact
Large numbers of Americans take part in some form of gambling each year, according to figures cited by the American Gaming Association. Nearly 60 percent of adults participated in gambling during the past year, with 30 percent visiting casinos and 21 percent placing sports wagers. Research from the AGA shows similar findings, with 57 percent of adults reporting gambling activity over the last 12 months, representing the highest level of participation the organization has recorded.
Any adjustment to federal rules would therefore reach a wide population of recreational bettors. The conversation around gambling-related taxes also follows a widely covered jackpot won in Nevada in October 2025, when a visitor collected more than $1 million on a $3 “Wheel of Fortune” slot machine spin.
Current Rules for Reporting and Withholding
Under existing federal requirements, individuals who receive gambling winnings of more than $600 typically receive a W-2G form. The Internal Revenue Service applies a standard 24 percent withholding rate to amounts of $5,000 or more. This applies across multiple types of games and contests, including casinos, horse racing, lotteries and raffles.
Withholding can reach 28 percent for prizes exceeding $5,000, and the rate can rise to 31 percent if the gambler does not provide a Social Security number. All gambling income must be listed on a Form 1040. Losses may be deducted, though they cannot exceed total winnings for the same year.
Broader Context in the US Gambling Landscape
While the president’s comment focused on federal policy, the US gambling industry continues to navigate a complex patchwork of state-level tax rules. States that allow online gambling impose their own sets of taxes, fees and reporting standards on operators. The lack of uniformity contrasts with regions where national frameworks guide gambling regulation. Each US state has its own expectations for reporting and compliance, leaving operators to manage differing requirements across jurisdictions.
For now, Trump has not offered a timeline or specific proposal for modifying the federal treatment of gambling earnings, only indicating he intends to “think about” the possibility.
Source:
“Trump says he will ‘think about’ eliminating tax on gambling winnings”, foxbusiness.com, December 9, 2025
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