Lottery winnings tax in Michigan
Michigan taxes lottery winnings as ordinary income at a flat 4.25%.
Updated · 2026 tax rules · How we calculate
You keep
$37,525
Cash at payout
$35,875
Total tax
$12,475
Over-withheld
$1,650
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $2,125
- Michigan withholding at payout
- $2,125
- Over-withheld
- $1,650
- You keep
- $37,525
$50,000 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.
Michigan requires the payer to hold back 4.25% for state tax.
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.
$50,000 minus $12,475 in federal and state tax: an effective rate of 25%.
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 lottery winnings as ordinary income at a flat 4.25%.[1]
- Federal tax form
- Lottery prizes of $2,000 or more that are at least 300 times the ticket price are reported on a W-2G. The threshold was $600 before 2026.[2]
- Federal withholding
- 24% is withheld from lottery prizes of more than $5,000 (minus the ticket price). No 300x test applies to lotteries.[4]
- Michigan withholding
- Michigan withholds 4.25% on lottery winnings over $5,000.[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]
- Visitors
- Michigan taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]
- Where to play
- Michigan runs a state lottery.[8]
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 |
| $10,000 | Yes | $2,825 | $1,550 | $425 | $8,025 |
| $50,000 | Yes | $14,125 | $10,350 | $2,125 | $37,525 |
| $100,000 | Yes | $28,250 | $22,114 | $4,250 | $73,636 |
Assumes a $2 ticket price, so the 300x test is met at every amount shown.
Questions
- How much is Michigan tax on lottery winnings?
- Michigan taxes lottery winnings as ordinary income at a flat 4.25%.[1]
- Does Michigan withhold tax from lottery winnings?
- Michigan withholds 4.25% on lottery winnings over $5,000.[5]
- Do visitors pay Michigan tax on lottery winnings?
- Michigan taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]
More for Michigan
All of Michigan's gambling tax rules · Lottery 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] Michigan Gaming Control Board: March 2026 iGaming revenue · checked September 22, 2026