Professional gamblers pay state taxes on their gambling winnings only if the pertinent states impose a tax on business income. The story is quite different for recreational gamblers.

Recreational gamblers need pay attention to each state’s income tax on gambling winnings, if any, as well as limitations on the ability to deduct gambling losses. In other words, not all states treat gambling winnings and losses alike.

“Live Free or Die” is the state motto of New Hampshire. Residents of New Hampshire and non-residents with New Hampshire gambling winnings may soon be living more freely: The State’s Senate recently passed a bill to repeal the state’s 10% gambling tax.

Under current New Hampshire Law, a 10% tax is imposed on all gambling winnings. NH residents must report all gambling winnings, no matter the source, and non-residents must report all gambling winnings derived from NH entities.

It didn’t take long for political opposition to this gambling tax to be put into action. Clearly, the state’s Lottery Commission has a strong voice, claiming that the gambling tax, effective July 1, 2009, has significantly hurt lottery and Powerball ticket sales. The bill is now under review by the Senate Finance Committee, and then will make its way to the House.