North Carolina Bill Allowing Tax Deduction for Gambling Losses Passes House Committee

^{North Carolina lawmakers in Raleigh are moving a controversial sports betting bill through the statehouse. (Image: Mihai Andritoiu / Alamy)}

The North Carolina House Commerce and Economic Development Committee voted last week in favor of advancing a bill that would allow state residents to deduct gambling losses on their state income taxes, though the measure was not without its critics.

House Bill 14 would bring North Carolina law in line with federal rules and the laws of most other states with legalized sports betting, which has led supporters of the legislation to say the bill is about tax policy fairness rather than gambling.

Supporters Say Bill is ‘A Fairness Thing’

The bill passed the committee on a bipartisan vote, with objections also coming from both sides of the aisle. 

Under current state law, gambling winnings are taxable, but losses are not deductible. That means that a gambler who wins very little – or even losses money – over the course of a year would still owe taxes on their winning bets. 

“I do see it as a fairness thing, and I also see it as a clarity issue,” Rep. Erin Pare (R-Wake), one of the bill’s sponsors, told WRAL News in January. “There’s a lot of confusion right now since sports gambling is a new thing in North Carolina, that most people who have been engaging in that over the last year made the assumption that the state laws around this were the same as federal.”

The deduction would only be available to those who itemize their deductions on their taxes. Deductions would also be limited to the amount of their winnings, so an individual could only write off earnings that would potentially be taxed, not earn additional deductions just for gambling and losing. 

Critics Argue Against ‘A Gift to the Gambling Industry’

However, some legislators and lobbyists have come out against the bill for a variety of reasons. At a meeting of the House Commerce and Economic Development Committee the prior week, Rev. Mark Creech, who lobbies for the group Return America, said the bill “lowers the deterrent to risky behavior.”

“[The bill is a] gift to the gambling industry, enabling them to keep addicted individuals on the hook – the very people who generate their profits – rather than protecting the average citizen who gambles,” Creech said in his prepared remarks.

Others have questioned the economic impact of allowing the tax deductions. Senate leader Phil Berger (R-Rockingham) previously said he didn’t see the need to change the current policy, while others in the North Carolina legislature have called for more study on the proposal.

“What I have see on sports betting is that the numbers have been very high on revenue, and so we’re looking at it from that standpoint, but I need to take a look at what fiscal impacts are on being able to deduct those taxes,” House Speaker Destin Hall (R-Caldwell) said when the bill was introduced in January. “I understand that a lot of states do that, and, as a general matter, I think fewer taxes will be good for the citizens of the state.”

The issue is coming up for tax season for the first time in 2025, as North Carolina only launched legal sports betting on March 11, 2024. As proposed, the bill being considered in the state legislature would be effective for the 2024 tax year.