First, it makes 100% bonus depreciation permanent, giving breeders and owners extra tax relief. Second, it limits how much gambling losses bettors can deduct, cutting their write-offs to 90% of losses starting in January 2026.
These moves aim to support the horse business but may squeeze professional and casual horseplayers alike.
Benefits for Breeders and Owners
The most celebrated provision makes the 100% bonus depreciation from the 2017 tax law permanent. Under this rule, horse farms and breeders can immediately deduct the full cost of yearlings, equipment, and stable improvements in the year they buy them. This change:
- Gives greater financial certainty to small farms and large breeding operations.
- Frees up capital for reinvestment in bloodstock, training facilities, and farm upgrades.
- Encourages long-term planning, since ranchers can count on the tax break staying in place.
Kentucky leaders like U.S. Rep. Andy Barr and racing groups such as the NTRA call this a game-changer. They say it will help keep the Bluegrass State at the forefront of global Thoroughbred breeding.
Keeneland’s president also praised the move, noting it will boost auctions and racetrack investments.
Challenges for Horseplayers and Bettors
On the flip side, the bill amends federal tax law to cap gambling loss deductions at 90% of annual losses. Today, bettors can deduct losses dollar-for-dollar against winnings. Starting January 1, 2026, even if a player breaks even on bets, they’ll face a 10% tax on gross winnings.
Key impacts include:
- Professional bettors may see higher tax bills, making betting less profitable.
- Casual horseplayers could owe taxes in losing years, reducing disposable income.
- Casinos, sportsbooks, and racetracks might adjust odds or handle wagers differently.
Industry consultants warn this provision could change betting behavior. Some bettors say they might bet less or move to states with friendlier tax rules. Horse racing venues, which share revenue with bettors through pari-mutuel pools, may also feel the pinch if betting activity slows.
Looking Ahead
While breeders celebrate a bright future, horseplayers are bracing for a tougher tax season. Groups like the American Gaming Association are already pushing Congress for a fix, proposing a “Fair Bet Act” to restore full deductions.
Kentucky’s lawmakers may team up to seek a bipartisan solution before the change takes effect. In the meantime, owners, trainers, and bettors will adjust contracts, budgets, and betting strategies to the new tax realities.
Ultimately, Trump’s Big Beautiful Bill aims to balance support for agriculture with revenue needs from gambling taxes. Its real-world effects will unfold over the next year, as the Thoroughbred community adapts to both the permanent depreciation and the new gambling limits. Kentucky’s racing heart beats on, but the game has definitely changed.
