Horse racing winnings tax in Michigan
Michigan taxes horse racing winnings as ordinary income at a flat 4.25%.
On an $8,000 horse racing win, $1,920 is withheld at payout. The tax comes to $1,450 ($1,110 federal and $340 Michigan), and you get $470 back when you file, so you keep $6,550. That's for a single filer with $60,000 of other income and no gambling losses.
Updated · 2026 tax rules · How we calculate
You keep
$6,550
Cash at payout
$6,080
Total tax
$1,450
Over-withheld
$470
- Form W-2G
- Yes
- Federal withholding at payout
- $1,920
- Federal tax on the winnings
- $1,110
- State tax
- $340
- Over-withheld
- $470
- You keep
- $6,550
$8,000 is at or above the $2,000 reporting threshold, so the payer files a W-2G with the IRS and gives you a copy.
The payer holds back 24% of winnings over $5,000 and sends it to the IRS. It's a prepayment, not the final tax.
Winnings are ordinary income stacked on your other $60,000. Your top dollar lands in the 22% bracket.
Michigan taxes gambling winnings as ordinary income.
More was withheld than these winnings add to your tax. The difference reduces what you owe on the rest of your return, or comes back as a refund.
$8,000 minus $1,450 in federal and state tax: an effective rate of 18.1%.
An estimate for 2026, not tax advice. It treats this win as your only gambling income for the year and leaves out local income taxes. Nothing you enter leaves your browser.
The rules
- Michigan tax
- Michigan taxes horse racing winnings as ordinary income at a flat 4.25%.[1]
- Federal tax form
- Horse racing (pari-mutuel) winnings are reported on a W-2G when they are $2,000 or more (after subtracting the wager) and at least 300 times the wager. The threshold was $600 before 2026.[2]
- Federal withholding
- 24% is withheld from pari-mutuel winnings of more than $5,000, but only when the win is also at least 300 times the wager.[2]
- Michigan withholding
- Michigan withholds 4.25% for nonresidents on horse racing winnings of $2,000 or more.[5]
- Gambling losses
- If you itemize federally, you can deduct the gambling losses you claimed on your federal return, so the 90% limit carries over; losses can't take winnings below zero.[6] How the federal 90% loss rule works
- Visitors
- Michigan taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[7]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Michigan.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $64 | $1,256 |
| $2,000 | Yes | $0 | $240 | $85 | $1,675 |
| $8,000 | Yes | $1,920 | $1,110 | $340 | $6,550 |
| $10,000 | Yes | $2,400 | $1,550 | $425 | $8,025 |
| $100,000 | Yes | $24,000 | $22,114 | $4,250 | $73,636 |
Assumes a $2 bet amount, so the 300x test is met at every amount shown.
Records to keep for horse racing winnings
Pari-mutuel winnings are your payout minus the bet. A W-2G and withholding both need the win to be at least 300 times the bet, which exotic bets like trifectas often clear.
Losses only count if you can prove them. For horse racing winnings, the IRS suggests keeping:[8]
- The races you bet on and the amount of each wager
- What you collected on winning tickets and lost on losing tickets
- Unredeemed tickets and payment records from the track
All of this goes alongside the diary the IRS expects for every kind of gambling: keeping gambling records the IRS will accept.
Questions
- How much is Michigan tax on horse racing winnings?
- Michigan taxes horse racing winnings as ordinary income at a flat 4.25%.[1]
- Does Michigan withhold tax from horse racing winnings?
- Michigan withholds 4.25% for nonresidents on horse racing winnings of $2,000 or more.[5]
- Do visitors pay Michigan tax on horse racing winnings?
- Michigan taxes nonresidents on horse racing winnings won there, so visitors may need to file a nonresident return.[7]
More for Michigan
All of Michigan's gambling tax rules · Horse racing in every state
Sources
- [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
- [2] IRS, Instructions for Forms W-2G and 5754 (01/2026) · checked September 22, 2026
- [3] Federal Register, REG-113229-25 proposed rule (Apr. 17, 2026) · checked September 22, 2026
- [4] 26 U.S. Code § 3402 (withholding) · checked September 22, 2026
- [5] MCL 206.703(6)-(8) · checked September 22, 2026
- [6] MCL 206.30(1)(bb) · checked September 22, 2026
- [7] MCL 206.110(2)(c)-(d) · checked September 22, 2026
- [8] IRS, Publication 529, Miscellaneous Deductions · checked September 28, 2026