President Trump’s “One Big Beautiful Bill” included several tax provisions favorable to the horse racing industry, such as making 100% bonus depreciation permanent, benefiting farms and owners by allowing full deductions on qualifying property like equipment and horses. However, the bill also introduced a significant change limiting the deduction for gambling losses to 90% of those losses, down from the previous 100%, starting in tax years after 2025. This change means bettors who break even or even lose money on wagering could still owe taxes on a portion of their gambling winnings, potentially impacting the economic engine of pari-mutuel wagering.

The National Thoroughbred Racing Association (NTRA) expressed concern over this limitation and plans to work toward restoring the full deduction for wagering losses. The American Gaming Association also supports efforts to reverse the change and modernize the tax code. This issue echoes past state-level tax adjustments, such as Kentucky’s brief elimination of loss deductions in 2018, which was quickly reversed after bettors faced tax liabilities despite overall losses. The industry remains hopeful that future legislative efforts will address and correct the deduction limitation.