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Michigan Law Allows Tax Deduction for Gambling Losses

Michigan Law Allows Tax Deduction for Gambling Losses

On December 27, 2021, Michigan Governor Gretchen Whitmer signed legislation allowing for the deduction of certain gambling losses for tax years starting in 2021. To the extent not deducted in determining adjusted gross income, taxpayers may now deduct wagering losses deducted on the taxpayer's federal income tax return for the same tax year. For a nonresident, only wagering losses that are attributable to wagering transactions placed at or through a casino or licensed race located in Michigan may be deducted and can’t exceed the gains on wagering transactions allocated to Michigan.

This will bring Michigan law closer to the federal treatment. The change is expected to reduce tax revenues by $12 to $17 million a year. There are still important distinctions between the treatment of professional and casual gambling losses, but this is welcome news that is likely to reduce taxes for many.




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