WRAL Taps Poole on New Gambling Tax Bill
North Carolina legislators are considering a fix for inconsistencies in how the state taxes gambling losses.
On Jan. 29, the first day of the 2025-26 legislative session, North Carolina lawmakers introduced a bill that would correct inconsistencies in how the state taxes gambling winnings.
Rep. Erin Pare, R-Wake, cosponsored House Bill 14, which would mirror federal tax law by allowing people to deduct their gambling losses from their taxable income as an itemized deduction. If passed, the new law would apply retroactively to bets made since Jan. 1, 2024.
In April 2024, shortly after online gambling became legal in North Carolina, tax and accounting professors Nathan Goldman and Christina Lewellen wrote about a gap in the state’s treatment of income from wagers. Unlike many other states and the federal government, North Carolina doesn’t allow gamblers to deduct their losses.
In its coverage of House Bill 14, WRAL-TV quoted a social media post from Goldman and referenced his and Lewellen’s research findings.
“Not being able to deduct losses means that you must pay taxes on your gross winnings, even if you lose money,” Goldman wrote on X. “This issue violates most common principles of a good tax system since it creates a situation where a taxpayer will owe taxes without the wherewithal to pay taxes.”
Existing law doesn’t treat taxpayers equitably, Lewellen said in the April 2024 Poole Thought Leadership article. She offered an example: Imagine two N.C. taxpayers, one who won $100,000 gambling with no losses and another who won $100,000 and lost $100,000. Current law taxes both gamblers’ winnings identically, even though the second person’s net earnings were $0.
“Most tax policies are based on the ability to pay,” Lewellen said. “But the cash available to pay is completely different between those two situations.”
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