Key Moments:
- Representatives Steven Horsford and Max Miller introduced HR 6985 to repeal a gambling loss deduction cap created by OBBBA.
- The bill would allow professional gamblers to fully deduct losses, directly addressing so-called “phantom income” taxation.
- If passed, the change would apply to tax years starting after December 31, 2025.
Background of the Controversial Tax Provision
Two lawmakers from opposite parties have joined forces to challenge a tax rule from President Donald Trump’s One Big Beautiful Bill Act (OBBBA). Under this rule, gamblers can deduct only 90 percent of their losses. As a result, many owe taxes on income they never received, even when losses exceed winnings.
The Bipartisan Legislative Effort
Democrat Rep. Steven Horsford of Nevada and Republican Rep. Max Miller of Ohio filed HR 6985, which mirrors the Senate’s FULL HOUSE Act. The bill aims to restore the prior standard. Specifically, it would allow professional gamblers to fully deduct losses against winnings. In doing so, it would end what critics call “phantom income” taxation. Additionally, the legislation targets changes made to the Internal Revenue Code of 1986 under OBBBA.
Industry and Political Reaction
Currently, OBBBA creates unusual tax outcomes. For example, if a gambler wins $10,000 and loses $10,000, they still owe taxes on $1,000. Previously, taxes applied only to actual profits. Therefore, gamblers with equal wins and losses owed nothing. Today, however, professional and high-volume gamblers face the greatest burden, which may push them out of the regulated U.S. market.
“Taxing people on money they never earned is fundamentally unfair and harmful to Nevada’s economy,” Horsford said in a statement. He added that the policy could drive tourism and major tournaments out of the state. Moreover, he warned on X that it could push gaming underground and damage Nevada’s tourism industry.
I’m proud to introduce the bipartisan FULL HOUSE Act with @RepMaxMiller to restore the full gambling loss deduction and fix an unfair tax rule. People shouldn’t be taxed on money they never earned, and Nevada’s tourism economy shouldn’t suffer because of bad policy.
Meanwhile, Trump’s OBBBA continues to draw criticism from both Democrats and Republicans. Lawmakers and industry leaders argue that the law effectively taxes phantom income. As a result, they say it harms casual and professional gamblers alike.
Miller echoed those concerns and framed the issue as one of fairness. “Americans should not be taxed on money they didn’t actually take home,” he said. He added that restoring the full deduction would ensure the IRS treats taxpayers consistently. Finally, he urged colleagues to support what he called a common-sense fix.
Looking Ahead: Legislative Outlook and Related Actions
If Congress passes the bill, the full loss deduction would return for tax years beginning after December 31, 2025. For now, the bill sits in committee, and its outcome remains uncertain. Still, Horsford and Miller insist that broad bipartisan support exists to correct what they see as a clear error in the tax code.
In addition, momentum continues to build elsewhere. Rep. Dina Titus of Nevada has introduced the Fair Accounting for Income from Betting Earnings and Taxation (FAIR BET) bill. Like HR 6985, it seeks to restore the full 100 percent deduction for gambling losses.
Comparison of Reform Bills
| Bill | Primary Sponsors | Key Objective | Effective Tax Year |
|---|---|---|---|
| FULL HOUSE Act / HR 6985 | Rep. Steven Horsford, Rep. Max Miller | Restore full deduction of gambling losses | After December 31, 2025 |
| FAIR BET | Rep. Dina Titus | Restore 100% gambling loss deduction | Not specified |
- Author
Daniel Williams
