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A bipartisan push to reverse a federal gambling tax change cleared its first major congressional hurdle last week, but the House has left Washington until after the midterm elections.
The House Ways and Means Committee voted 38-5 on Wednesday, Sept. 16, to advance legislation that would restore the full deduction for gambling losses, up to the amount of a taxpayer’s winnings. Lawmakers attached the provision to the Digital Asset Tax Certainty Act (H.R. 10357), a 98-page package that also addresses cryptocurrency taxes.
The measure would reverse a provision of President Donald Trump’s One Big Beautiful Bill Act, signed July 4, 2025, that cut the deduction from 100% to 90% of winnings. The cap applies to tax years beginning after Dec. 31, 2025. The committee’s language would apply from the same date, providing retroactive relief for 2026.
Why the 90% cap draws criticism
Under the previous rule, a gambler who won $100,000 in a year and lost $100,000 owed no tax on gambling income because there was no net gain. Under the 90% cap, that gambler can deduct only $90,000 and owes tax on $10,000 never kept.
Critics have called the result a “phantom income” tax. Committee Chairman Jason Smith, R-Mo., said the Senate’s change left taxpayers owing tax even when they broke even or lost money overall. He credited Rep. Max Miller, R-Ohio, whose fix the committee adopted.
The language comes from the bipartisan FULL HOUSE Act, which Miller and Rep. Steven Horsford, D-Nev., introduced in January. Rep. Dina Titus, D-Nev., filed a similar bill, the FAIR BET Act, the next working day after Trump signed the tax law, but the FULL HOUSE language is what advanced.
Nevada Democrats push for quick action
Titus said the vote followed 14 months of work and urged the House to approve the measure before Jan. 1, 2027. She criticized the timing, noting the House will be out of session until after the election, and said House Republican leaders must bring the provision to the floor and the Senate must move quickly.
House Speaker Mike Johnson, R-La., canceled Thursday’s votes and let members leave a day early for a scheduled seven-week recess. The House is not scheduled to return until the second week of November, according to the Spokesman-Review.
Horsford said restoring the full deduction would provide relief for taxpayers and protect Nevada jobs that depend on gaming and tourism. “No one should pay taxes on money they never earned,” he said.
Gaming industry cheers the committee vote
Casino operators, online gambling companies and trade groups have opposed the cap. American Gaming Association President and CEO Bill Miller thanked the committee and urged Congress to pass the FULL HOUSE Act, arguing that a full deduction would keep consumers in the legal market, where protections exist.
Wynn Resorts CEO Craig Billings called the committee’s action an important step toward protecting employees and restoring fairness to the tax code.
House and Senate hurdles still stand
The bill must pass the full House and then the Senate, where Sens. Catherine Cortez Masto, D-Nev., and Ted Cruz, R-Texas, back a companion bill, S. 2230. Trump would then need to sign it.
Passage is not guaranteed. As of the committee vote, prediction market traders implied a 48% chance that the 90% limit would be repealed by April 1, 2027, according to the Las Vegas Sun.
Supporters now are focused on returning the measure to the agenda when the House reconvenes. Until it becomes law, the 90% cap remains in effect.
