Gambling winnings tax in Minnesota

Minnesota allows gambling losses only as an itemized deduction on the state return, whether or not you itemize federally. Take its 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 Minnesota’s own sources on 2026-09-25.

In short

If you get Social Security, a win can cost you part of Minnesota’s subtraction for it, because the subtraction shrinks as your federal AGI goes up.7, 6
At high incomes Minnesota cuts your deductions. The law spares gambling losses from that cut, but the 2025 form cuts them too.17, 12
The Minnesota alternative minimum tax does not allow the gambling loss deduction. You can owe Minnesota AMT even if you owe no federal AMT.11, 18
Minnesota withholds 7.25 percent from State Lottery prizes large enough for federal withholding.15

How Minnesota treats gambling losses

11, 12, 14

Minnesota does not tie the deduction to your federal itemizing choice. You can itemize on the Minnesota return even if you take the federal standard deduction, but the losses count only if you do, in place of Minnesota's standard deduction.

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

Two examples, worked at 2026 Minnesota 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
Minnesota: $1,258
Total: $4,854

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. Minnesota lets you deduct gambling losses as an itemized deduction on the state return, whether or not you itemize federally. Your Minnesota income, after the larger of the standard deduction and your itemized deductions, goes from $44,700 without the win to $63,200 with it. The extra $18,500 is taxed at 6.8 percent, which comes to $1,258.

A winning year

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

Federal: $10,350
Minnesota: $3,400
Total: $13,750

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. Minnesota lets you deduct gambling losses as an itemized deduction on the state return, whether or not you itemize federally. Your Minnesota income, after the larger of the standard deduction and your itemized deductions, goes from $44,700 without the win to $94,700 with it. The extra $50,000 is taxed at 6.8 percent, which comes to $3,400.

Minnesota income tax rates, 2026

Single filer thresholds. Other filing statuses use different bands.

Taxable income	Rate
$0 to $33,310	5.35 percent
$33,310 to $109,430	6.8 percent
$109,430 to $203,150	7.85 percent
$203,150 and above	9.85 percent

The calculator also applies what this table leaves out: a cut to the standard deduction and itemized deductions as income rises, taken before the table.

Withholding on winnings

5, 15

Minnesota withholds 7.25 percent unless a line below gives another rate. The payout that triggers it depends on the wager, and the lowest trigger is $5,000. The rules in the state's sources:

the state lottery: above $5,000, measured after the stake comes off (winnings subject to federal withholding).
pari-mutuel wagering: above $5,000, at 9.85 percent, and only where the payout is at least 300 times the stake, measured after the stake comes off (withheld by the track at Minnesota's top income tax rate).

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

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

The federal 90 percent loss limit in Minnesota

13, 14, 19

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).

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

Minnesota follows the federal code as it stood on 2026-05-01. The paragraph above says what this means for the federal 90 percent limit.

If you do not live in Minnesota

Minnesota taxes a nonresident on gambling winnings from Minnesota. If your Minnesota gross income meets the minimum filing requirement, $14,950 for 2025, you file Form M1 with Schedule M1NR. The reciprocity agreements with Michigan and North Dakota do not cover gambling winnings.

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

More about Minnesota

If you get Social Security

Minnesota subtracts your taxable Social Security in full while your federal AGI is at or below a line for your filing status:7, 6, 8

Filing status	2025	2026
Married filing jointly or surviving spouse	$108,320	$110,780
Married filing separately	$54,160	$55,390
Single or head of household	$84,490	$86,410

Above that line, the subtraction is 10 percent less for each $4,000 of AGI or part of it, or each $2,000 if you file separately. An alternate method based on provisional income can leave you some subtraction past that band.7, 6, 8

The cut to deductions at high incomes

For 2026, Minnesota cuts your standard deduction or itemized deductions by 3 percent of federal AGI over $244,400 up to $337,800, plus 10 percent of AGI above that, but never by more than 80 percent. Over $1,107,750 the cut is a flat 80 percent. If you are married filing separately, the first two thresholds are $122,200 and $168,900.17, 16

The law does not apply this cut to gambling losses (subd. 2(d)(3) and subd. 8), or to medical expenses or investment interest (subd. 2(d)(1) and (2)). The 2025 Schedule M1SA worksheet cuts gambling losses anyway.17, 12

Minnesota’s alternative minimum tax

The Minnesota alternative minimum tax, at 6.75 percent, does not allow the gambling loss deduction. You can owe Minnesota AMT even if you owe no federal AMT.11, 18

If you itemize only on your Minnesota return, it is not clear how the Minnesota AMT treats your losses. The law adds back only deductions taken for the federal AMT, and you took none. The department still says gambling losses are not allowed for Minnesota AMT, and no source settles the question.

Older guidance on the loss limit

The department’s gambling winnings page still gives the limit as 100 percent of winnings, with no year. That is 2025 guidance. It does not mean Minnesota dropped the 90 percent limit.

A small risk remains that the law’s words “losses described in section 165(d)” name only a type of loss and do not bring in the 90 percent limit. That is not the standard reading.

Withholding

Minnesota withholds 7.25 percent from Minnesota State Lottery prizes large enough for federal withholding. A licensed track withholds from such pari-mutuel winnings at the top individual income tax rate.15, 5

No other Minnesota withholding rule for gambling winnings was found.

About this estimate

If you are 65 or older, the calculator adds $2,000 to the Minnesota standard deduction, or $1,600 for each married person 65 or older. It also takes the Schedule M1R subtraction: $9,600, or $12,000 joint, less half your federal AGI over $14,500, or $18,000 joint with both 65 or older, and less your Social Security that is not taxed federally. It cannot see a pension that is not taxed, and it leaves the subtraction out on a separate return.

If you enter your Social Security, the calculator works out the subtraction both ways and uses the larger. If you do not, it shows a warning where a win moves your AGI through the band where the subtraction shrinks.

On gambling losses the calculator follows the law, not the 2025 form, and warns you where the form gives a smaller deduction.

The calculator cuts every other itemized deduction you enter. If they include medical expenses or investment interest, which the law spares, the estimate can be too high. It warns you by how much at most.

The calculator does not include the Minnesota AMT.

Sources

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

1. Minn. Stat. 290.0132 subd. 5: the subtraction base amount under 290.0802 for a person 65 or older or disabled (checked 2026-10-12)
2. Minn. Stat. 290.0802 subd. 2: the subtraction base amount, $12,000 joint, $9,600 single, $6,000 separate, less nontaxable benefits and half of AGI over $18,000, $14,500 or $9,000 (checked 2026-10-12)
3. Minnesota 2026 inflation-adjusted amounts: additional standard deduction for aged or blind, $1,600 married or surviving spouse, $2,000 single or head of household (checked 2026-10-12)
4. MN DOR, Minnesota Standard Deduction: the 2025 additional amount at 65 or older, $2,000 single or head of household, $1,550 for each married person (checked 2026-10-12)
5. Minn. Stat. 290.92, subd. 27, withholding on pari-mutuel winnings at the top rate (checked 2026-10-05)
6. MN DOR, Social Security Benefit Subtraction: the 2025 simplified-method thresholds (checked 2026-09-26)
7. Minn. Stat. 290.0132 subd. 26, the Social Security subtraction and its phase-out (checked 2026-09-26)
8. Tax Year 2026 Inflation-Adjusted Amounts, the Social Security subtraction thresholds (checked 2026-09-26)
9. Minnesota Department of Revenue, 2026 inflation-adjusted amounts: standard deduction of $15,300, $23,000 and $30,600 (checked 2026-09-25)
10. MN DOR income tax rates and brackets, 2025 and 2026 tables (checked 2026-09-11)
11. MN DOR gambling winnings page, deduction allowed for regular tax, disallowed for AMT (checked 2026-09-11)
12. Schedule M1SA instructions, state-only itemizing permitted (checked 2026-09-11)
13. Laws 2026 chapter 128, conformity advanced to May 1, 2026 (checked 2026-09-11)
14. Minn. Stat. 290.0122 subd. 8, the loss deduction, written as section 165(d) of the Internal Revenue Code (checked 2026-09-16)
15. Minn. Stat. 290.92, subd. 29, withholding on State Lottery winnings (checked 2026-09-11)
16. Minnesota Department of Revenue, inflation-adjusted amounts for 2026, standard deduction limitation (checked 2026-09-25)
17. Minn. Stat. 290.0123 subd. 5 and 290.0122 subd. 2, the limits on the standard and itemized deductions, and subd. 2(d)(3) and subd. 8, which spare gambling losses (checked 2026-09-25)
18. Minn. Stat. 290.091 subd. 1, the alternative minimum tax at 6.75 percent (checked 2026-10-06)

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

19. 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)

We could not confirm these from an official source: whether any city or county tax applies.