House Ways and Means Committee Chairman wants to reverse tax hike on gambling

Chairman Jason Smith spoke with news outlets following a field hearing held on July 25, where legislators discussed the gambling loss tax deduction cap signed into law by President Trump.

House Ways and Means Committee Chairman Jason Smith recently spoke with local media following a field hearing held on July 25 regarding President Donald Trump’s Big Beautiful Bill Act, stating he hopes to reverse the gambling loss tax deduction cap signed into law on July 4. 

President Trump’s budget reconciliation bill would only allow for gamblers to deduct 90% of their losses along with any winnings made throughout the year, meaning if a player won $100,000 in 2025 but also lost $100,000, they still have to pay $10,000 in taxes.

Smith, who also serves as a Maryland Representative, described the decision to enforce a gambling loss tax deduction cap as “wrong” and believes it is “absolutely” possible to reverse the Big Beautiful Bill Act’s framework prior to the end of 2025. 

The field hearing was also attended by Nevada Representatives Steven Horsford and Dina Titus, who filed the Fair Accounting for Income Realized from Betting Earnings Taxation (Fair Bet) Act on July 7 in an attempt to reverse the gambling loss tax cap signed into law by President Trump.

Good to know: New Jersey Assemblyman Dan Hutchison introduced Bill A5971 on July 25, which looks to prohibit sports wagering licensees from offering or accepting micro bets, described as an “increasingly common form of live wagering” within the Assemblyman’s release

The American Gaming Association (AGA) also shared a letter sent to the House Ways and Means Committee prior to the July 25 hearing, having said, “We were gratified to see that the House passed bill included the 100% deduction for gambling losses, a 70-year bipartisan principle, that allows gamblers to deduct losses up to their winnings, a standard that was reaffirmed by the 2017 Tax Cuts and Jobs Act. 

“However, because of Senate procedural rules, this provision was changed to allow for only 90% limitation on gambling loss deductions. The result creates an unfair precedent by taxing phantom income and uniquely penalizing a legal, heavily regulated activity. We encourage timely action to restore fairness and consistency in the tax code for American consumers and look forward to working with you to revert to the House language.”

At the time of writing, the full US congress isn’t scheduled to meet until September, as the Fair Bet Act, or any reversal attempt made by Smith, would also need to receive a formal vote from the Committee as well as pass through both the House of Representatives and Senate.

Kirk Geller

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