Minnesota Gambling Winnings Tax Calculator: MN Gambling Tax Rules Explained

Those who bet and win when gambling in Minnesota are responsible for paying federal and Minnesota gambling taxes on their winnings. Minnesota sports betting, lotteries, and other casino games require winners to report and pay income tax on all winnings, regardless of whether they received a federal W-2G from the IRS. Learn more about Minnesota gambling taxes in this article.

Minnesota Gambling Tax Calculator

Any money won from gambling or wagering can is considered taxable income. To calculate the taxes on gambling in Minnesota, use the Minnesota gambling tax calculator below to calculate how much you potentially owe. To do this, select the state (Minnesota), your relationship status, total taxable income, and the amount you won.

When considering potential implications for the gambling-winning taxes Minnesota residents may potentially have to pay, it’s always important to plan for federal taxes first. Depending on the winning threshold and the type of game, the operator will issue an IRS Form W-2G and a 24% tax will be applied automatically to the payout. When paying state taxes, the rate at which Minnesota gambling winning taxes are taxed is determined by the winner’s tax filing status and income bracket. Your income bracket will be the biggest factor in terms of the amount of Minnesota gambling tax you owe.

Are Gambling Winnings Taxable in Minnesota in 2023?

Gambling winnings from any Minnesota betting app or casino game are considered taxable in Minnesota and are thus subject to Minnesota gambling taxes and federal gambling taxes. The amount of gambling taxes Minnesota residents pay is based on their income bracket and tax filing status. Residents of Minnesota are required to pay taxes on gambling in Minnesota, other states, foreign countries, and wagers placed online. Non-residents of Minnesota pay Minnesota gambling taxes on gambling winnings won in Minnesota but could potentially receive a credit in their home state for Minnesota gambling winning taxes.

What are the Gambling Tax Rates in Minnesota?

Married Couples

Filing Jointly

• $0 - $43,950 | 5.35%
• $43,950-$174,610 | 6.80%
• $174,610-$304,970 | 7.85%
• $304,970 + | 9.85%

Filing Separately

• $0-$21,975 | 5.35%
• $21,975-$87,305 | 6.80%
• $87,305-$152,485 | 7.85%
• $152,485 + | 9.85%

Individuals

Single

• $0-$30,070 | 5.35%
• $30,070-$98,760 | 6.80%
• $98,760-$183,340 | 7.85%
• $183,340 + | 9.85%

Head of Household

• $0-$37,010 | 5.35%
• $37,010-$148,730 | 6.80%
• $148,730-$243,720 | 7.85%
• $243,720 + | 9.85%

History of Gambling Tax Regulation

Gambling tax law policy has changed over the years depending on the government's attitude towards gambling. Throughout the history of the United States, attitudes toward gambling have changed based on the culture of the moment. In the early 20th century, there was a greater desire to purge gambling based on historical events like the 1919 Black Sox scandal, where professional gamblers conspired to fix the World Series.

Those attitudes have evolved over the century as the gambling industry re-emerged in places like Las Vegas and Atlantic City. Over the last 30 years, the attitude from the United States government has been to accept that gambling will always happen and to focus on making sure that the United States government reaps its rewards in the form of tax revenue.

How Does The IRS Know If You Won Money Gambling?

Depending on your type of wagering, the IRS may never become aware of your gambling winnings. That’s because taxes on gambling in Minnesota (and most other states) are the responsibility of the bettor who makes the wager.

The IRS will become aware of your gambling winnings when you hit a certain threshold of winnings, which varies depending on the game. In situations like that, the issuer of the form (most likely the operator or organization through which you won the money) will send you a W-2G form. This form will be sent to you by January 31, following the year in which you won the income.

How to Claim and Report Minnesota Gambling Winnings for Taxes

There are two approaches one should have toward paying Minnesota gambling taxes. 

First, they should always keep detailed records of any wagering they do, regardless of the level of stake. All income from gambling is taxable and must be reported on your federal and state income taxes each year. It is recommended that bettors keep a gambling log that details the when, where, and how much of the wagers they placed over the calendar year. 

Beyond that, a Form W-2G will be sent to anyone whose winnings cross a predetermined threshold. The federal government will receive an automatic 24% off the top of the amount for taxes, and Minnesota gambling winning taxes will need to be claimed on the annual tax return in which the win took place. 

The thresholds for Minnesota gambling winning taxes that generate a Form W-2G are as follows: 

• $1200 or more on slot machines or bingo
• $1500 or more on Keno
• $5000 or more on poker tournaments, lotteries, wagering pools, sweepstakes
• $600+ and at least 300 times the amount wagered (e.g., placing a bet with a sportsbook for $20 that nets a return of $6000).

What to Do if You Do Not Receive a w-2G Form in Minnesota?

Most bettors in Minnesota (and nationwide) will likely not receive a W-2G form. That’s because there are specific thresholds bettors need to reach regarding winnings in certain wagering activities before taxes on gambling in Minnesota generate a W-2G form.

That being said, it is important to remember that all gambling winnings are considered taxable income, even if they don’t reach the thresholds that generate a W-2G. In that case, it’s wise for Minnesota residents to keep accurate records of their gambling activity and use a Minnesota gambling tax calculator to estimate what they’ll potentially owe on taxes on their winnings in the Gopher State.

What Happens If You Forget To Report Gambling Losses in Minnesota?

All gambling winnings are taxable, but it is possible to offset the income from your gambling winning by deducting your losses. Therefore, accurate records of wins and losses must be kept to ensure that an accurate tax return is filed. 

Forgetting to report losses is damaging in two ways. 

One, not reporting losses does not allow you to offset the total amount of taxable income from gambling claimed on your return and thus affects the amount of gambling tax Minnesota will make you pay. Second, while the consequences of not reporting gambling wins and losses will likely not carry a significant penalty depending on the amount, not reporting taxable income puts you on a slippery slope that could lead to more significant penalties for tax avoidance.

Can I Deduct Gambling Losses in Minnesota?

An important factor in gambling taxes Minnesota residents pay is whether the gambler in question is a professional gambler or a recreational gambler. This is incredibly important to a Minnesota gambler’s tax picture because recreational gamblers are subject to the alternative minimum tax, and thus are not allowed to deduct losses. Professional gamblers can deduct their losses and therefore pay less in Minnesota gambling taxes.

For professional gamblers, gambling losses can be deducted from the gambling-winning taxes Minnesota residents pay if they choose to claim itemized deductions on their Minnesota state tax return. It is impossible to deduct more in gambling losses than you report in winnings on your federal or state income tax return.

What If I Lost More Than I Won Gambling?

Depending on your recreational or professional gambler status in Minnesota, your tax situation may be treated differently. Professional gamblers can deduct losses in Minnesota, whereas recreational gamblers are subject to the alternative minimum tax and, therefore not eligible to itemize their losses. Generally speaking, the amount of gambling you can deduct can not exceed the winnings you report as income.

Minnesota Lottery Taxes

When a person buys a lottery ticket and wins a prize of $5000 or more, they are subject to Minnesota gambling winning taxes of 7.25% state and 24% federal income tax. Depending on your income profile, those deductions may not be sufficient to meet your entire tax obligation. If you hit it big and win a significant amount in the lottery, you’ll have a few decisions to make - notably, if you’ll take a lump sum or annuity payment. This complex decision requires several perspectives - your current income, how the sum of money would affect your tax bracket and a potential investment strategy for the money you’re winning. Most importantly, Minnesota residents should run the numbers through a Minnesota gambling tax calculator that considers the tax laws in their state to determine if a lump sum or annuity is the better fit for their situation.

How Are Group Lottery Wins Taxed in Minnesota

It’s always fun to win together, and the same goes for the lottery in Minnesota. If you win as a group, there are a few considerations you should remember. First, make sure you have a plan for how the prize share will be determined. Second, decide when as a group, you will claim the prize. Third, each group member should assess their personal financial situation when deciding whether to select a lump sum or annuity payment for their share of the winnings. Running some numbers through a Minnesota gambling tax calculator would help paint that picture more effectively for each group member. Each group member that receives a payout would also be subject to the Minnesota gambling winning taxes of 24% federal income tax and 7.25% state income tax.

Taxes on Multi-State Lottery Wins

Given Minnesota’s reputation as a high-tax state, getting a boon of a score in Powerball or MegaMillions would spit out a hefty tax bill. According to a gambling tax calculator Minnesota residents could use to assess the bill, they would be required to pay the 24% federal income tax and 7.25% state income tax that comes when winning over $5000 in a lottery. On top of that, the whole amount won would then be subjected to the state income tax rates as taxable income. A Minnesota gambling tax calculator would conclude that almost 10% of the amount would go to the state in income tax on a winning ticket of a billion dollars. Then, federal taxes would have to be paid.

What Happens If I Don’t Report My Gambling Winnings?

Accurately reporting gambling winnings is incredibly important to ensuring compliance with the federal and state income tax code. Although winning statements from casinos or lotteries are only generated above a certain win threshold, it is the responsibility of each individual bettor to ensure that they are paying the appropriate amount of taxes on their gambling winnings.

A way to make reporting your gambling winnings much easier is to keep detailed records of your wins and losses throughout the calendar year so that you have an accurate assessment of your gambling winnings. From there, you can plug those numbers into a gambling tax calculator Minnesota residents can use to assess potential tax liabilities they are responsible for so that there are no surprises at tax time.