Since Michigan's starting point for determining taxable income is AGI and since Michigan law did not permit deduction of wagering losses prior to PA 168, only professional gamblers' losses were a component of Michigan taxable income.Ģ021 PA 168: PA 168 amends Part 1 of the MITA, specifically section 30, which defines the individual income tax base, to create a new individual income tax deduction for wagering losses sustained by casual gamblers, effective for tax years beginning in 2021. Itemized deductions are not a component of AGI. In contrast, casual gamblers report wagering losses, if at all, as an itemized deduction on Schedule A. Professional gamblers report losses on Schedule C, Profit or Loss from Business, which allows the loss to be incorporated into AGI. The manner in which wagering losses are reported at the federal level by professional and casual gamblers differs. This notice describes the new deduction, which applies to tax years 2021 and after.īackground: The determination of Michigan taxable income begins with federal adjusted gross income (AGI) and includes all wagering gains for both professional and casual gamblers. On December 29, 2021, Public Act 168 (PA 168) was signed into law amending the Michigan Income Tax Act (MITA) to create a new individual income tax deduction for wagering losses sustained by casual gamblers.
