Fair Accounting for Income Realized from Betting Earnings Taxation Act
Summary
The "Fair Accounting for Income Realized from Betting Earnings Taxation Act" (FAIR Bet Act) aims to amend Section 165(d) of the Internal Revenue Code of 1986. The proposed change would allow taxpayers to deduct 100% of their wagering losses, instead of the current 90%, up to the amount of their wagering winnings. This bill was introduced in the House of Representatives on July 7, 2025, and referred to the Committee on Ways and Means.
Expected Effects
If enacted, the FAIR Bet Act would alter how wagering losses are treated for federal income tax purposes. Taxpayers who engage in betting activities could potentially reduce their tax liability. This change could impact government revenue depending on the prevalence and magnitude of wagering activities.
Potential Benefits
- Allows taxpayers to fully offset wagering losses against winnings, potentially reducing their tax burden.
- Simplifies tax accounting for individuals who gamble.
- May incentivize increased reporting of wagering income, leading to more accurate tax collection.
- Could provide financial relief to individuals who experience net losses from wagering activities.
- May reduce the incentive for individuals to underreport wagering income.
Potential Disadvantages
- Could reduce overall tax revenue if deductions increase significantly.
- May disproportionately benefit higher-income individuals who have more resources to engage in wagering.
- Could be perceived as encouraging or normalizing gambling activities.
- May complicate tax administration if it leads to increased scrutiny of wagering activities.
- Potential for increased tax fraud if not properly enforced.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, as outlined in Article I, Section 8, Clause 1 of the Constitution. The amendment to the Internal Revenue Code is a legitimate exercise of this power. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).