How Much Does Minnesota Tax on Gambling Winnings?

As Minnesotans continue to wait on the legalization of sports betting in the state, they still have access to a robust selection of Minnesota online gambling options, along with over 20 tribal casinos.

However, with the joy of gambling also comes the responsibility of paying taxes on winnings as it is required by law in the Gopher State and federally.

If you are a resident of the state, and like to gamble, make sure to read over the details below on Minnesota’s tax rate for gambling winnings.

Minnesota Tax Rate On Gambling Winnings

There are some states that do not levy a state gambling tax on winnings. For instance, Texas does not have an income tax, which means that they don’t have a tax on gambling.

In Minnesota, this is not the case. Residents must report gambling winnings on their federal and state income tax returns. With this in mind, it is important to be aware of the Minnesota tax rate on gambling winnings.

How much are you taxed on gambling winnings in Minnesota?

Minnesota income tax law applies to winnings from gambling in the state¹. Consequently, your income tax bracket in Minnesota will determine the total tax owed on your gambling winnings.

The Special Taxes Division of the Department of Revenue of Minnesota is responsible for collecting gambling taxes and fees from organizations².

2023 Minnesota Income Tax Rates For Married Couples³:

2023 Minnesota Income Tax Rates For Single Individuals⁴:

According to the Minnesota Department of Revenue, taxes are owed on all types of gambling from anywhere in the U.S. and other countries.

Whether you are playing at real money online casinos, the state lottery, the top Minnesota tribal casinos for slots, or casinos in other states, the Gopher State wants a cut of your winnings.

Residents of Minnesota, that have gambling winnings in other jurisdictions, may be eligible for a tax credit if taxes were paid on these same winnings to another state. The Minnesota Department of Revenue advises completing Schedule M1CR, Credit for Income Tax Paid to Another State⁵.

Yes, this also includes sports betting in Minnesota. Winnings at online betting sites and sportsbooks that are not located in Minnesota are expected to be reported on your tax return.

How Much Are You Taxed On Gambling Winnings In MN?

Let’s take a look at a few examples of how the Minnesota tax rate on gambling winnings applies to your tax bracket.

Example A:

Steven is single, unemployed, and lived alone in 2022. He tried his luck on a scratch off card with the Minnesota State Lottery.

Much to his surprise, Steven hit a $50,000 jackpot. Despite not having any employment income, he will be in the 6.80% tax bracket for the current filing year.

Example B:

Sarah is married, earned $65,000, and filed a joint return with her husband in 2022. She got lucky at DuckyLuck casino with a big $100,000 jackpot on a slot machine.

The $100,000 win will bump her tax bracket up to 7.85% from 6.80% with a total tax obligation of $165,000.

Example C:

Jack is a divorced, single father who earned $90,000 in 2022. He deposited $500 at Bovada to place a Super Bowl bet.

After winning $1000, Jack calls it quits and collects his winnings. As a head of household earning $90,000, plus the $1,000 gambling win, his total tax obligation will be $91,000 in the 6.80% tax bracket.

How To File Minnesota Gambling Taxes

Gambling winnings, from all sources, must be reported on Form M1, Individual Income Tax⁶.

There are no other special forms required to report your Minnesota gambling winnings. Everything is in one place to report your income, including gambling winnings, for the year.

Do Minnesota Non-residents Pay Income Tax On Gambling Winnings?

Yes, non-residents of Minnesota are responsible for paying taxes on their gambling winnings. However, the rules for reporting and filing are different for non-residents of Minnesota.

The Minnesota gross income must meet that state’s minimum filing requirement of $12,600. If this threshold is met, then gamblers must complete Form M1 and include Schedule M1NR/Nonresidents/Part-Year Residents⁷.

Non-residents are not eligible for a Minnesota tax credit if they have to pay gambling taxes in their home state. That being said, gamblers are encouraged to investigate whether there is a tax credit in the state they reside.

Deducting Gambling Losses in Minnesota

Minnesota is a state where deducting gambling losses is permitted. It is important to understand that only Minnesota itemized deductions will be allowed.

Additionally, gamblers cannot deduct more in gambling losses than gambling winnings reported on their federal income tax return. To report your itemized deductions, fill out Schedule M1SA, Minnesota Itemized Deductions, and include it when you file your income taxes⁸.

As a gambler, it is your responsibility to keep track of your receipts and gambling slips. Any deduction must be backed up by proof. The government has the right to reject any claims where there are no receipts.

We recommend maintaining a spreadsheet that tracks gambling activity and deposits/withdrawals for the year. All of the wins and losses in your spreadsheet should correspond to your bet slips.

Federal Gambling Taxes For Minnesotans

Gopher State residents are also responsible for paying federal income tax on gambling winnings. If you have ever won playing slots at a Minnesota tribal casino and had 24% deducted from your payout, then you were taxed on the spot by the federal government.

Gambling winnings in the U.S. are fully taxable at the federal level. This includes all types of gambling, regardless if a Form W-2G was issued by a casino operator or not. All gambling winnings must be reported on Form 1040⁹.

The retail casino is responsible for issuing Form W-2G on behalf of the IRS if reportable gambling eclipses a certain threshold. Refer to the chart below for more information.

Form W-2G Gambling Winnings Thresholds¹⁰:

The federal government will automatically apply a 24% tax in any of the above-mentioned scenarios. After the IRS assesses your return, you may be subject to a tax refund or owe more depending on your tax bracket.

Oftentimes online casinos will not issue a W-2G for gambling winnings. It is important to understand that your winnings must be reported even if a W-2G is not issued.

Which Is The Best Online Casino To Gamble At In Minnesota?

Wild Casino is our choice as the best online casino to gamble at in the Land of 10,000 Lakes. This online gambling site has one of the largest menus of slots games to choose from. With an intuitive interface that is easy to use, there shouldn’t be any problems finding any game that you want to play.

Not much of a slot player, but love the exhilaration of table games? Wild Casino has you covered with casino classics like: online blackjack for real money and baccarat. In fact, members also love to play online roulette at this casino as well.

Wild Casino also earns high marks for being one of the best live dealer online casinos in the industry. With live dealers at your disposal 24/7, there is always an authentic in-person casino experience available.

Lastly, Wild Casino offers incredible welcome bonuses, reload bonuses, and crypto bonuses. These casino bonuses will ensure Minnesotans have extra money to enjoy their favorite casino games. Don’t forget to file your taxes properly, after you start winning at Wild Casino.