Michigan Gambling And Tax Calculator

Let’s answer the first—and biggest—question right off the bat: all Michigan gambling winnings are taxed. Even small amounts in the low hundreds of dollars will be subject to state and federal taxes.

Whenever you gamble online, it’s crucial to understand the tax implications. On this page, we’ll walk through everything you need to know about gambling taxes in Michigan.

Free tax calculator

What gambling winnings are taxable in Michigan?

Gambling winnings include any money you win from:

• Retail casinos/sportsbooks
• Horse racing
• Online casino gambling
• Bingo
• Keno
• Sports betting
• Poker (online or retail)
• Lottery games

Any winnings are taxable in Michigan.

Keep in mind, however, that “winnings” only include what you’ve profited from a given bet. For example, a $100 bet with odds of +150 would win you $250 (the original wager amount plus the winnings). In this case, only the $150 would be taxed.

There’s one exception to Michigan’s gambling tax rules. You can exclude your first $300 in winnings from the total household resources category.

Michigan state tax on gambling winnings

Michigan imposes a 4.25% state tax rate on gambling winnings.

Even though Michigan casinos and online gambling operators are required to fork up a fair share of their earnings to the state, players must also pay a portion of their winnings.

It’s your responsibility to report gambling winnings when you do your state taxes. You can only deduct losses if you itemize deductions on your state tax return. Taking the standard deduction means you’ll pay taxes on your total winnings.

All-in-all, Michigan’s gambling tax rate isn’t too bad. Certain nearby states with some forms of legal gambling have higher state tax rates while others have significantly lower contributions. Illinois asks gamblers for 4.95% while Indiana requires 3.23%. Pennsylvania, meanwhile, asks gamblers for only 3.07% of their total winnings.

Federal tax on gambling winnings

Generally, gambling winnings are taxed like any other income. This will be true for most Michigan gamblers (or visitors who play at the state’s gambling sites). Your taxes will change based on your tax bracket.

The catch? Wins that meet certain thresholds are subject to a flat withholding rate of 24%:

• Wins of $600 or more when the win amount is at least 300 times the wager amount
• $1,200 or above won on slot machines or in bingo games
• $1,500 or more won from keno games
• $5,000 or above from poker tournaments

In these cases, the provider of the game in question is required to give you a form W-2G, and your winnings will be paid with the 24% already deducted. This process will require some identification, including your Social Security Number and state ID or Driver’s License.

Wins that don’t meet the above requirements are still subject to federal taxes, but it’s on you to report them when you file your return. It’s essentially the honor system.

Deducting gambling losses

Some states allow you to deduct gambling losses and offset taxes on your winnings. Michigan allows this—to an extent.

Thanks to a bill signed in 2021, you can deduct losses equal to your winnings. Say you won $1,400 but lost $3,200. You could only deduct $1,400 of the losses. To do this, you must itemize your deductions. Many taxpayers simply claim the standard deduction, keeping this option off the table. If you itemize, you can take advantage of gambling loss deductions.

Claiming gambling loss deductions requires careful record-keeping. If you gamble regularly via any channel in Michigan, be it online or land-based, you should keep a daily record of your wins and losses (to be fair, we recommend you do this anyway because it makes filing your tax return that much easier).

How to report gambling winnings

When you go to report state gambling winnings on or before tax day, the amount of your winnings will determine the form you should use.

• W-2G: You’ll use this form if a provider is required to give it to you. This only happens with relatively large wins under specific circumstances.
• 1099-MISC: This is the most common form for reporting gambling winnings in Michigan. Some gambling providers will automatically give you one if you win more than $600.
• 1099-K: The 1099-K is primarily for filing if you’ve withdrawn winnings via a third-party payment service such as PayPal.

Federal gambling taxes are reported on Form 1040. This is also where you can deduct your gambling losses, if applicable. Gambling winnings are categorized as “other income” on this form.

If you use an online tax service, most platforms will have a specific section or questionnaire regarding gambling winnings, making the reporting process much easier than filling out the required forms yourself.

Do I have to pay Michigan gambling taxes if I’m not a resident?

Short answer: yes.

Any wins will be subject to the federal tax rate, which is incurred even if you’re just visiting Michigan and happen to win while gambling in the state. Nothing changes about your federal return in this case.

As for state taxes, there are some key differences. Non-Michigan residents must pay the state 4.25% and report it on their home state’s return as well. This could subject you to a double (or near-double) payment, but some states offer a tax credit that offsets the Michigan taxes you paid on your winnings. This means you won’t always have to double up on payments.

There’s hope for some, though. Six states near Michigan have agreements that prevent you from having to submit a Michigan non-resident return. These states are:

• Illinois
• Indiana
• Kentucky
• Minnesota
• Ohio
• Wisconsin

Residents of these states do not have to pay Michigan taxes on income earned in the state. If you win some money at Michigan online casinos while visiting from Indiana, for example, you’ll only have to pay Indiana income tax on those winnings. That’s a big benefit considering Indiana’s rate is 3.23%. In other states such as Illinois, it’s a setback because the tax rate is higher.

Tax tips for regular gamblers

Even with all the information above, gambling taxes can be hard to grasp. Follow our top tips to ensure you get it right the first time and save yourself some of the confusion.

Keep a daily gambling log

Every time you gamble, keep a record of how much you wager and how much you win or lose. Keep it handy in a spreadsheet or easily accessible folder so you can produce accurate records if and when needed.

Consult your tax professional

You could be armed with all the knowledge in the world and still be perplexed by gambling taxes. That’s okay; there are professionals who can help. Consult with a tax professional who knows gambling tax rates and laws to ensure you’re paying the right amount.

Use an online tax service

Platforms like Turbotax and H&R Block allow you to file your tax returns online. They have easy-to-use tax software that accounts for gambling winnings with simple questionnaires. If you file your own taxes, using these platforms can make reporting your gambling winnings much easier than filling out the forms yourself.