TLDR North Carolina’s budget plan would let bettors deduct gambling losses on state taxes for the first time. The deduction would apply retroactively to Jan. 1, 2025. The sportsbook tax rate would rise from 18% to 23% under the plan. Sportsbooks would need to issue a W-2G form when a customer’s annual winnings reach $2,000 with one operator. UNC Chapel Hill and NC State could each become eligible for up to $5.8 million a year in betting tax funds.
North Carolina lawmakers are considering a change to how the state taxes sports betting. The plan could give bettors a tax break while raising costs for sportsbook operators.
The proposal is part of ongoing budget negotiations. It has not yet passed both chambers of the legislature.
Under the plan, bettors would be allowed to deduct their gambling losses on state taxes. North Carolina has never offered this deduction before.
If passed, the change would apply retroactively. Bettors could claim losses going back to Jan. 1, 2025.
The state is also introducing new reporting rules. Sportsbooks would need to send a W-2G tax form to any customer who wins $2,000 or more with one operator in a year.
Earlier drafts of the budget raised concerns among bettors. Without a loss deduction, gamblers could have owed state taxes on their full winnings, even if they lost money overall.
The new deduction is meant to address that problem. It gives bettors a way to lower their taxable income based on real losses.
Federal Rules Still Apply
Even with the state-level change, federal tax rules will still affect bettors. The IRS caps gambling loss deductions at 90% of total losses.
That means a bettor who wins $2,000 and loses $2,000 with the same sportsbook could still owe federal tax on $200. This