Michigan SB 764 to allow bettors to deduct their losses from tax

Governor of Michigan, Gretchen Whitmerushered in a new era for the game by signing Senate Bill 764. The bill was signed into law last week and effectively overwrites part of the Income Tax Act of 1967.

Senate Bill 764 will allow bettors to deduct their losses from taxes

Thanks to the new bill, bettors in Michigan will be able to report their gambling losses and have them deducted from their income tax. Thanks to the retroactive nature of the bill, players who played after January 1, 2021 can declare their losses and have them deducted from their taxation.

According to Michigan tax analysts, Senate Bill 764 is expected to reduce Michigan tax revenue by $12 million to $17 million. However, according to its own author, Senator Curtis Hertelthe bill will fix a loophole in Michigan’s tax law.

Michigan tax laws already required bettors to include their winnings as taxable income, but never considered their losses. By introducing SB 764, the state will take a step forward in making it easier for bettors on a losing streak – something several other states have already done.

Prior to the bill’s approval, Hertel explained that it’s not fair for people to pay taxes on money they never earned or never had. According to him, SB 764 “makes tax season less complicated for the Michiganders who have been in the game this year.”

“It’s really just a matter of fairness, where if you don’t make money, you shouldn’t have to pay taxes on it,” Hertel summed up.

Only responsible players will benefit from the bill

However, gamblers should always exercise caution and make informed decisions, as SB 764 will provide tax relief only for bettors who itemize their federal filings and for bettors whose losses do not exceed their winnings. Therefore, the idea is not to encourage gambling misdeeds, but rather to help those who bet responsibly. Because of this, people who bet carelessly and accumulate heavy losses will not be exempt from tax. TurboTax elaborated on this:

“The amount of gambling losses you can deduct can never exceed the winnings you report as income. For example, if you have $5,000 in winnings but $8,000 in losses, your deduction is limited to $5,000. You could not write off the remaining $3,000 or carry it forward to future years.

Michigan has a total of 20 land-based casinos (17 tribal and 3 commercial) and has noticed strong online activity thanks to the state allowing iGaming through slot machines. For this reason, the introduction of the SB 764 is a welcome one for all responsible bettors in the state.