A particular element of the North Carolina tax code could cause headaches for bettors in the country’s newest market.
A recent article from NC State University accounting professors Nathan Goldman and Christina Lewellen drew the attention of Gov. Roy Cooper because it pointed out a problematic flaw in the state’s gambling tax law.
As the article explains, at the federal level, only people who itemize deductions are allowed to subtract losses up to the amount of their winnings from their tax returns. In most states, this is allowed at the state level as well. For North Carolina though, that is not the case.
What Goldman and Lewellen noted is that in North Carolina, those who take part in gambling are subject to a 4.5% tax on winnings. Moreover, they cannot deduct losses against wins. So, for example, if a bettor profited $100 off one bet but then lost $800 of eight other bets, they would still legally be obliged to pay $4.50 of taxes on that single win.
For sports bettors, some of whom place hundreds of bets a year, this change can prove to be very costly come tax season if they are required to pay taxes on all wins but cannot write off a single losing wager.
The article has gained so much traction that it came across Cooper’s desk or, in this case, Twitter feed.
Cooper retweeted the post with his own call to action of what needs to be done:
“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,” he wrote.
There is still time for the legislature to act on this in 2024, as the state lawmakers do not conclude for the year until July 31.
