Gambling winnings tax in Michigan

Michigan allows gambling losses only if you itemize on your federal return. Take the standard deduction and it taxes your gross winnings. Only 90 percent of your losses count from 2026, so a losing year can still leave part of your winnings taxed.

Checked against Michigan’s own sources on 2026-10-05.

In short

Inside one session, Michigan nets your gains and losses, but a session cannot go below zero. You cannot net one session against another.5
If you live in Michigan, a win at a casino or race track licensed by the state is reported, but no Michigan tax is withheld.10
If you live in Detroit, expect the city rate on your gross winnings. The Detroit income tax book that was read shows no subtraction for gambling losses, though no source we found states the rule outright.

How Michigan treats gambling losses

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Michigan allows the deduction only to filers who itemize on the federal return. Take the federal standard deduction and the offset disappears, so gross winnings are taxed even in a year you finished down.

The two examples below are the same numbers the calculator uses, worked at Michigan rates.

Two examples, worked at 2026 Michigan rates

A single filer with $60,000 of other income who takes the standard deduction on everything except gambling losses.

A losing year

You win $50,000 and lose $52,000, so you finish down $2,000.

Federal: $3,596
Michigan: $136
Total: $3,732

You finished the year down and still owe tax.

Federally you itemize, so your losses offset your winnings, but the 2026 rule caps that deduction at 90 percent and leaves $3,200 taxable. Michigan allows the loss deduction only to filers who itemize federally, which you do, so $3,200 is taxed at 4.25 percent, which comes to $136.

A winning year

You win $50,000 and lose $10,000, so you finish up $40,000.

Federal: $10,350
Michigan: $2,125
Total: $12,475

Federally you take the $16,100 standard deduction, which is worth more than itemizing, so your gambling losses do not reduce your federal tax at all. Michigan allows the loss deduction only to filers who itemize federally. You do not, so the full $50,000 is taxed at 4.25 percent, which comes to $2,125.

Michigan income tax rates, 2026

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Taxable income	Rate
$0 and above	4.25 percent

The calculator also applies what this table leaves out: a personal exemption of $5,900 a person, taken before the table.

Withholding on winnings

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Michigan withholds 4.25 percent. The payout that triggers it depends on the wager, and the lowest trigger is $5,000, or $2,000 for a nonresident. The rules in the state's sources:

the state lottery: above $5,000.
slot machines, keno and bingo: $2,000 or more, for nonresidents only (at a casino licensed by the state, on winnings it must report on a Form W-2G).
pari-mutuel wagering: $2,000 or more, for nonresidents only, and only where the payout is at least 300 times the stake (at a track licensed by the state, where it must report the win on a Form W-2G).

These sources give no rule for other kinds of bet, so do not assume tax was withheld on one.

Casinos and race tracks licensed by the state withhold this only from a nonresident’s winnings, MCL 206.703. A resident’s win there is reported to the state, not withheld. MCL 206.703 does not mention tribal casinos.

Withholding is a credit against the bill, not the bill itself. It does not settle what you owe.

Local tax

Michigan cities may levy an income tax, most of them at 1 percent on residents and 0.5 percent on nonresidents. For a city above 600,000 population, which is Detroit alone, MCL 141.503(2)(d) caps the rate at 2.40 percent on residents and 1.20 percent on nonresidents, stepping down to 2.20 and 1.10 once the lighting authority bonds are paid. Those are statutory ceilings. We could not confirm the rate that Detroit actually levies. City tax reaches gambling winnings through federal Schedule 1 other income.

The federal 90 percent loss limit in Michigan

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From tax year 2026 the federal deduction for gambling losses is cut to 90 percent of what you lost, and never more than what you won. Public Law 119-21 did it, at section 70114(a), by rewriting 26 U.S.C. 165(d).

Michigan applies the federal 90 percent limit, so the deduction on your state return is cut the same way.

Michigan follows the federal code as it stood on 2025-01-01. The paragraph above says what this means for the federal 90 percent limit.

If you do not live in Michigan

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A nonresident is taxed on Michigan-sourced gambling and may deduct only losses from wagers placed at or through a Michigan casino or licensed race meeting.

The calculator works the bill for somebody who lives in Michigan. It does not apportion income between states, so a nonresident return is not what the figure above describes.

More about Michigan

How wins and losses net

Michigan does not tax the amount you bet. Only your gain above the bet is income.5

Michigan uses two netting rules. Inside one session, your gains and losses net, but a session cannot go below zero. You cannot net one session against another.5

A session is a 24-hour period on the same type of game at the same place. The session method does not apply to sports betting, because RAB 2022-22 says most sports bets are not continuous play.5

Withholding

Casinos and race tracks licensed by the state withhold Michigan tax only from a nonresident’s winnings that they must report to the IRS. If you live in Michigan, a win there is reported but no Michigan tax is withheld.10

The rate can change

The 4.25 percent rate can change. MCL 206.51(1)(b) sets it "except as otherwise provided under subdivision (c)", and subdivision (c) cuts the rate for a tax year when general fund revenue grows faster than inflation. That is why the rate was 4.05 percent for 2023.

Local tax in Detroit

The Detroit income tax book that was read never mentions gambling and has no subtraction for gambling losses. No source we found states the rule outright, so treat it as likely rather than settled: if you live in Detroit, expect the city rate on your gross winnings, up to the 2.40 percent statutory ceiling.

Which federal code Michigan follows

Michigan follows the federal code as of January 1, 2025, but you can elect to use the code for the tax year instead.8

About this estimate

The estimate takes off your $5,900 personal exemption, or $11,800 on a joint return. It leaves out the exemption for a dependent, or for a spouse with no income on a separate return, and the $20,000 standard deduction ($40,000 joint) that a filer born after 1952 can take from age 67. For those filers the figure can be high.

Sources

Every figure above traces to a primary source: a statute, an administrative code, a state agency page, or official form instructions.

1. MCL 206.30(1)(bb), deduction for wagering losses deducted under IRC 165(d) federally (checked 2026-09-11)
2. MCL 206.30(2), a personal exemption for each taxpayer, and for a spouse with no gross income on a separate return (checked 2026-10-11)
3. MCL 206.30, a deduction of $20,000, or $40,000 joint, for a filer born after 1952 who has reached the age of 67 (checked 2026-10-11)
4. Treasury, withholding tax information by calendar year, 2026 personal exemption (checked 2026-10-11)
5. Revenue Administrative Bulletin 2022-22, gambling gains, losses and expenses (checked 2026-09-11)
6. Treasury taxpayer notice, income tax rate for the 2026 tax year (checked 2026-09-11)
7. MCL 206.51(1)(b), the rate is 4.25 percent unless the condition in subdivision (c) is met (checked 2026-09-16)
8. MCL 206.12(3), Internal Revenue Code in effect January 1, 2025 or at taxpayer option (checked 2026-09-16)
9. MCL 141.503 and Treasury city rate guidance, Detroit and city income tax rates (checked 2026-09-16)
10. MCL 206.703(6) and (7), casino and track withholding on nonresident winnings (checked 2026-10-05)
11. Michigan Lottery, how to claim prizes by mail, tax withholding by prize amount (checked 2026-10-05)
12. IRS Instructions for Forms W-2G and 5754 (Rev. January 2026), $2,000 for 2026 payments (checked 2026-10-05)

The federal rule, for the parts of this page that rest on it

13. Public Law 119-21 section 70114(a), which rewrote 26 U.S.C. 165(d) on wagering losses from tax year 2026 and sets out its text (checked 2026-10-18)