A conservative think tank led by former Vice President Mike Pence is urging federal lawmakers to completely eliminate tax deductions for gambling losses, which is a move that would be unwelcome news for US sports bettors and poker players.
Pence’s Advocacy Group Wants to Stop Gambling Tax Deductions
Earlier this week, Pence’s conservative advocacy group, Advancing American Freedom (AAF), circulated a policy memo on Capitol Hill calling for the rejection of three bipartisan bills (one of which is sponsored by Nevada Representative Dina Titus) that aim to restore the full 100% deduction for gambling losses.
Under the recently passed One Big Beautiful Bill Act, the federal deduction for gambling losses has been reduced to 90%. Titus and other lawmakers are pushing back against the change, arguing that it’s unduly harsh and could drive bettors toward unregulated gambling markets. Pence’s organization, however, is going even further. The group is advocating for the complete removal of the deduction, which would result in gamblers being taxed on their full winnings regardless of losses.
The recent developments could be seen as yet another move in the continuous struggle between the Democrat and Republican sides want to have in the gambling sphere in the US. Some recent moves from the democrats have been spearheaded by the previously mentioned Nevada Rep, Titus, who most recently urged the CFTC to probe into Trump’s nominee for the position of CFTC Chair, Brian Quintenz, over his alleged ties to Kalshi, a massive predictions market platform.
What’s the Tax State of Gambling Losses Currently?
Currently, Gambling losses may be tax-deductible, but the IRS imposes strict conditions. To qualify, filers must itemize their deductions using Schedule A (Form 1040) and maintain detailed records of both winnings and losses. Importantly, the amount of losses claimed cannot exceed the total gambling income reported on the tax return. Qualifying losses should be reported under “Other Itemized Deductions.”
Gambling winnings, on the other hand, are subject to federal income tax withholding. The payer is required to issue you a Form W-2G, Certain Gambling Winnings. However, all gambling income must be reported on your federal tax return, regardless of whether you receive a W-2G. Taxpayers must report these earnings on Form 1040 or 1040-SR, using Schedule 1 if applicable. In some cases, gambling winnings may also trigger a requirement to make estimated tax payments throughout the year.
We should also remind you that this article is only informational and should not be taken as financial or legal advice.
