As the North Carolina legislative session gets rolling, Gov. Roy Cooper hopes legislators will ease resident’s NC sports betting tax burden.
Cooper urged lawmakers through a post on Twitter last month to allow bettors to deduct losses from their taxes. His post was in response to an article about the issue by two North Carolina State University professors.
“When it comes to sports wagering, it’s not fair to have to pay taxes on your winnings without being able to deduct your losses. Legislators should fix this,” Cooper tweeted.
NC sports betting is the most recent market to launch, but legislators could address multiple issues this session, which runs through July 31. Rep. Marcia Morey introduced a bill prohibiting prop bets on college athletes Wednesday.
NC sports betting tax losses
Professors Nathan Goldman and Christina Lewellen published “An Unexpected Tax Burden: How North Carolina Will Tax Your Gambling Income Even if You Have Net Losses” April 24. The article notes taxpayers can subtract betting losses from winnings in their federal tax filings if they itemize their deductions.
They cannot, however, deduct the losses from their North Carolina taxes. They must pay a 4.5% tax on all gambling earnings.
As the article notes, “Even if the taxpayer does not earn net winnings on their gambling, they will still owe NC state income taxes.”
North Carolina tax situation not unusual
There are 10 states that do not allow losses to be deducted from their winnings, according to the NC State professors.
Those states include:
- Connecticut
- Illinois
- Indiana
- Kansas
- Ohio
- Rhode Island
Some states have fixed the deduction
Several states have implemented laws to allow deductions following the debut of sports betting.
West Virginia lawmakers passed a law in 2023 allowing deductions for bettors, with the ability to amend returns back to 2020. West Virginia sports betting began in August 2018.
Michigan Gov. Gretchen Whitmer signed a similar bill allowing tax deductions on gambling winnings in December 2021. Michigan sports betting began in March 2020.
Quick changes for NC sports betting?
North Carolina legislators worked through NC sports betting law for multiple years before launching March 11. Despite that recency, lawmakers could discuss multiple changes to the law this session, including Morey’s college prop betting prohibition bill.
While lawmakers could address the issue, the state’s initial sports betting proponents are against the prohibition.
Cooper’s tax deduction wish does not have a champion legislator as of this week.
