The One Big Beautiful Act (OBBBA), passed by Congress and expected to be signed into law by President Trump, makes permanent 100% bonus depreciation, an important incentive for Thoroughbred breeders and owners, but also has negative implications for gamblers that are concerning to the industry.
The Republican-controlled House of Representatives passed the bill on Thursday, and now the bill heads to President Trump's desk to be signed, which is expected to happen on Friday, July 4. The bill extends Trump's 2017 tax cuts, approves hundreds of billions of dollars on the military and the funding of deportations, and instills steep cuts on Medicaid, food aid, and renewable energy funding.
On the positive side for racing, the one-hundred percent bonus depreciation was part of the Tax Cuts and Jobs Act of 2017, signed into law during the first Trump administration. Originally, this provision included a phase-out schedule that made bonus depreciation 40% this year, 20% in 2026, and completely phased out by 2027. Now, it will stay at 100%, retroactive to Jan. 20, 2025.
In a press release Friday, the National Thoroughbred Racing Association thanked Representative Andy Barr (R-KY), who was instrumental in leading the charge to cut problematic language changing the nature of the excess business loss carryover, which was removed in the final version of the bill. In addition to Barr, NTRA President and CEO Tom Rooney credited Senate Majority Leader John Thune (R-SD) and former Senate Majority Leader Mitch McConnell (R-KY) with ensuring the horse industry was represented.
But, as outlined by the TDN's Dan Ross in the July 3 edition, the version of the bill passed contains a tax provision that could prove prohibitive to gamblers, with ramifications for horse racing's bottom line.
Deductions for gambling winnings will be limited to 90% of annual losses. Currently, gamblers can deduct 100% of wagering losses (below a net profit) for any given year.
The NTRA went on to say that while there are many victories for the horse racing industry in the OBBBA, there is still work to be done to offset some losses by horseplayers in their ability to deduct tax losses. The organization said they were committed to working on that fix moving forward.
When asked what possible fixes could be implemented to reverse the impacts from the new gambling tax, Rooney said it would most likely have to come with next year's budget. “We will figure that out,” he added.
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