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North Carolina lawmakers are discussing new bills that could reduce state taxes on tips, overtime pay, and gambling losses. The House Commerce and Economic Development Committee recently held a hearing on these proposals, and a vote is expected next week.
'No Tax on Tips' Bill Explained
A Republican-sponsored bill, called "No Tax on Tips," proposes allowing workers to deduct up to $2,500 in tips, bonus, or overtime income from their state taxes. This idea is similar to a proposal at the federal level by former President Donald Trump. Rep. Harry Warren, R-Rowan, introduced the bill, saying that about
20 other states are working on similar tax changes. However, Rep. Jay Adams, R-Catawba, questioned the possibility of misuse."Have you figured out all the different ways that this could be gamed?" Adams asked.
Warren admitted that no one has a perfect solution yet but emphasized that many states and even Congress are exploring similar tax breaks. He also mentioned that an official revenue impact analysis is still pending.
Tax Deduction for Gambling Losses
Another bill under discussion would allow taxpayers to deduct gambling losses from their state income taxes. This proposal, backed by Rep. Erin Paré, R-Wake, seeks to address what she calls an "unfair" tax policy. Under current North Carolina law, gamblers must pay taxes on their winnings but cannot deduct their losses.
However, federal law allows people to offset their winnings by claiming gambling losses, up to the amount they won. Paré argues that this change would create a fairer tax system. "Even though there's gambling in the title, this is not a gambling bill — it's a fair tax bill," she explained.
Opposition and Concerns
Not everyone supports the proposed gambling tax deduction. Critics worry that allowing people to deduct their losses could encourage riskier gambling habits. Rev. Mark Creech of the conservative group Return America expressed concerns. "The bill reduces the immediate financial impact of losing money, and this, in turn, lowers the natural deterrent against risky behavior," he said. Despite opposition, Rep. Keith Kidwell, R-Beaufort, defended the proposal. He stressed that taxpayers should not be forced to pay taxes on winnings without the ability to deduct losses.
Next Steps
Both bills are set for a vote in the House Commerce and Economic Development Committee next week. If approved, they will move forward in the legislative process.
