Offset Those Winnings!

Michigan gambling taxes are getting clarifications. If you hit it big at a Michigan casino (or while playing blackjack from your phone) in 2021, here’s some good news. Historically, the IRS has allowed gambling losses to offset gambling winnings so that taxpayers are not paying tax on the money they don’t have.

Unfortunately, the State of Michigan never had a provision on the books that allowed a similar deduction, unfairly taxing Michigan patrons on the gross amount of their gambling winnings irrespective of losses.

Michigan Gambling Taxes

Frear no! A bill has passed both chambers of Michigan legislature with broad bipartisan support and heads to Governor Whitmer’s desk for signature to close this odd loophole and allow gambling losses to offset gambling winnings on the State of Michigan income tax.

A notice shared on the Department of Treasury website for the State of Michigan reads: “On December 29, 2021, Public Act 168 (PA 168) was signed into law amending the Michigan Income Tax Act (MITA) to create a new individual income tax deduction for wagering losses sustained by casual gamblers. This notice describes the new deduction, which applies to tax years 2021 and after.

“PA 168 amends only the MITA and affects only the calculation of state income tax liability.  It does not amend the City Income Tax Act, MCL 141.601 et. seq. or affect the calculation of city income tax liability.”