The state's racing industry will receive an extra $235 million over the next five years after legislation was passed in NSW parliament to minimise wagering taxation.

The legislation, passed on Wednesday, will reduce the amount of money the state government takes in wagering tax over a five-year period until NSW achieves parity with Victoria.

Under the existing arrangement, the NSW government takes $3.22 from every $100 bet on the TAB compared to the $1.28 taken by the Victorian government.

NSW deputy premier and minister for racing Troy Grant said some of the additional money would be invested into the The Championships, Sydney's major racing carnival.

"Achieving racing tax parity with Victoria is crucial to securing the future of this multi-billion dollar industry that involves more than 90,000 employees, volunteers and participants," Mr Grant said.

"With $235 million over the next five years, there will be significant investment in regional racetracks, apprenticeships and making The Championships the premier racing event in Australia."

Racing NSW has been campaigning for a reduction in the wagering taxation rate to give the industry equality with Victoria and secure its future.