Michigan gambling winnings tax: the basics from official sources
Won money at an online casino, a sportsbook or a casino floor? Here is what Michigan Treasury and the IRS say about taxes on gambling winnings, in plain English, with a link to every source.
This is not tax advice. It is a short summary of what official sources say. Tax rules change and depend on your situation (residency, filing status, whether you itemize). Talk to a tax professional, or check withMichigan Treasury and theIRS directly.
Are gambling winnings taxed in Michigan?
Yes. Michigan Treasury says gambling and lottery winnings are subject to Michigan individual income taxto the extent that they are included in your adjusted gross income. In other words, winnings that count as income on your federal return flow into the income Michigan taxes.
Source: Michigan Department of Treasury,“Are gambling/lottery winnings subject to Michigan individual income tax?”(retrieved September 26, 2026).
What is Michigan’s income tax rate for the 2026 tax year?
4.25%. On April 15, 2026, Michigan Treasury announced that the conditions for a rate cut were not met, so the state individual income tax rate for the 2026 tax year stays at 4.25%. Winnings included in your adjusted gross income are taxed as part of your Michigan income.
Source: Michigan Department of Treasury,“State Individual Income Tax Rate for 2026 Tax Year Determined”(April 15, 2026).
Do I have to report gambling winnings to the IRS if I didn’t get a Form W-2G?
Yes. The IRS says gambling winnings are fully taxable and you must report all gambling winnings on Form 1040 or 1040-SR (using Schedule 1), including winnings that aren’t reported on a Form W-2G. Gambling income includes cash winnings and the fair market value of prizes such as cars and trips.
- When you get a W-2G: a payer issues Form W-2G for certain gambling winnings, or when winnings are subject to federal income tax withholding.
- 2026 reporting threshold: the IRS Instructions for Forms W-2G and 5754 (revised 01/2026) say the minimum threshold amount for payments made in calendar year 2026 is $2,000, adjusted for inflation in later years. Which threshold applies depends on the type of gambling winnings (the IRS points to Pub. 1099 for each type), and some types also require the win to be at least 300 times the wager.
- Withholding: the same instructions describe 24% federal withholding on some larger wins, for example certain winnings where the amount won minus the wager is more than $5,000.
- Estimated tax: the IRS notes you may need to pay estimated tax on gambling income (see IRS Publication 505).
Sources: IRS Topic no. 419, Gambling income and losses; IRS Instructions for Forms W-2G and 5754 (01/2026)(“What’s New” and withholding sections), retrieved September 26, 2026.
Can I deduct gambling losses on my federal and Michigan returns?
Only in limited cases. Here is what each agency says.
- Federal (IRS): you may deduct gambling losses only if you itemize deductions on Schedule A and kept a record of your winnings and losses. The losses you deduct can’t be more than the gambling income you reported.
- Federal change for 2026: for tax years beginning after December 31, 2025, the IRS says federal law (as amended in 2025) limits the deduction to 90% of wagering losses, and only to the extent of your wagering gains for the year.
- Michigan (Treasury): Treasury says the Michigan Income Tax Act has no provision to subtract your losses on the Michigan return, and you cannot net winnings and losses for tax years 2020 and prior. Starting in 2021, if you itemized on your federal return (did not take the standard deduction) and deducted wagering losses from casual gambling, you may be eligible to deduct wagering losses on your Michigan return. Treasury says to include U.S. Form 1040 Schedule 1 and Schedule A.
- Nonresidents (Michigan): Treasury says deductible losses are limited to wagering gains from wagers placed at or through a casino or race track located in Michigan.
Sources: IRS Topic no. 419; IRS Internal Revenue Bulletin 2026-19(REG-113229-25, section 165(d) wagering losses); Michigan Treasury gambling winnings FAQ. Retrieved September 26, 2026.
What gambling records should I keep for taxes?
The IRS says that to deduct losses you must keep an accurate diary or similar record of your gambling winnings and losses, and be able to provide receipts, tickets, statements or other records that show both.
- Keep every Form W-2G you receive.
- For online play, save the account history or statements your casino or sportsbook account provides, if it offers them.
- Write down dates, where you played, and amounts won and lost, as you go rather than at tax time.
Source: IRS Topic no. 419 (“Recordkeeping”), retrieved September 26, 2026.
Is the tax on my winnings the same as the Michigan online casino tax rate?
No. When people talk about Michigan’s “online casino tax rate,” they usually mean what operators pay. The Michigan Gaming Control Board’s revenue reports say internet gaming tax/payment percentages range from20% to 28% of adjusted gross receipts, based on each operator’s yearly totals. That is separate from the income tax onyour winnings described above.
Monthly operator revenue and taxes, straight from MGCB: Michigan iGaming revenue tracker.
Related guides
- Stuck withdrawal or dispute with a Michigan online casino: the MGCB complaint process
- Is it licensed? Michigan online casino operator map (MGCB list)
- Responsible gambling and Michigan self-exclusion
21+. Gambling involves risk; winnings are never guaranteed. If gambling stops feeling optional, call1-800-GAMBLER (24/7, free and confidential) or read ourresponsible gambling guide. Educational only, not tax, legal or financial advice. We are not a gambling operator.