HomeMassachusetts Gambling Taxes

Massachusetts gambling taxes

On this MABetting.com page, you will find everything you need to know about Massachusetts gambling taxes, how to file taxes for MA gambling winnings, a tax calculator, and much more.

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With brick-and-mortar casinos, the Massachusetts Lottery, horse racing, Daily Fantasy Sports (DFS), and now sports betting legal in Massachusetts, gambling taxes have become a hot topic in The Bay State. All are regulated by the Massachusetts Gaming Commission, and understanding the taxes that come with gambling winnings in MA is a key component of the industry.

Let’s take a closer look at everything you need to know when it comes to Massachusetts gambling taxes, as we dive into the details.

Do you have to pay tax on gambling in Massachusetts?

Yes, you have to pay tax on gambling winnings in Massachusetts, both on a state and federal level. For Federal taxes, gambling winnings are considered income, and the rate varies based on your total taxable income and filing status.

As far as state taxes go, Massachusetts gambling winnings are taxed at a flat rate of 5%, and you must report all winnings as income on your MA state tax return. Depending on where you won gambling, there also might be automatic withholdings from your winnings of a certain size.

For example, if you had a big cash out from one of the three brick-and-mortar casinos in MA, they might be without the 24% for Federal taxes and 5% for State taxes before you even see the money. If that is the case, you will receive a W-2G tax form, which you must include with all of your gambling winnings when filing your annual returns.

What are the tax rates for gambling in MA?

Massachusetts State Gambling Taxes

In Massachusetts, the tax rate for gambling winnings of any kind is a flat 5% rate. This rate applies to all gambling winnings and is treated as regular income on your state tax return. Whether it be from casinos, the Massachusetts Lottery, sports betting, or others, all winnings are subject to the same 5% flat tax rate in MA.

It’s important to note that you can deduct losses from your winnings in your Massachusetts state tax return, as long as they do not exceed your winnings. Keeping a detailed record of all your wins and losses is a good way to ensure you are calculating your winnings, less any losses, appropriately.

Federal Gambling Taxes

In addition to the 5% flat tax rate imposed by the state of Massachusetts, Massachusetts residents must also pay Federal Taxes. Ranging from 10% to 37% based on your total taxable income and filing status, just include the gambling winnings when calculating your total income for the year.

Below is a schedule for single filers in 2023:

  • 10% on taxable income up to $11,000
  • 12% on taxable income over $11,000 to $44,725
  • 22% on taxable income over $44,725 to $95,375
  • 24% on taxable income over $95,375 to $182,100
  • 32% on taxable income over $182,100 to $231,250
  • 35% on taxable income over $231,250 to $578,125
  • 37% on taxable income over $578,125

With the introduction of sports betting in 2023, a new focus has been placed on paying your taxes accordingly. Just like with your state return in Massachusetts, you can also deduct gambling losses from your Federal tax return activity, as long as they do not exceed the amount you won.

Tax calculator for gambling in Massachusetts

When calculating your taxes for gambling in Massachusetts, there are a few key pieces of information you will want to have readily available, for both your state and federal tax returns. Luckily, there are plenty of tax calculators for gambling in Massachusetts that will help you determine your taxes owed.

The pieces of information you will have to have readily available when using them are the state where they occurred (Massachusetts), your individual filing status, (Single, Married, Head of Household, or Surviving Spouse), total taxable income (annual), and the amount of winnings you netted from gambling. Again, keep in mind that your net winnings from gambling should include any losses deducted, as long as they do not exceed your amount won.

How to file taxes for Massachusetts gambling winnings

With legal sports betting in MA now fully launched, the question of how to file taxes for Massachusetts gambling winnings is now at the forefront for many bettors. Fear not, as we here at MABetting.com have you covered with some high-level steps for how to file taxes for Massachusetts gambling winnings.

  1. Prepare: At the end of each year, you’ll want to recap your wins and losses from the year to understand what your reported winnings, less any losses, should be reported. If you were a big winner at a Massachusetts casino or sportsbook, you would receive a W-2G form to prove your winnings (if they were) were reported. Regular gamblers would be wise to keep detailed records throughout the year, tracking all wins and losses.
  2. Complete Your Tax Returns: Once you add up all your gambling winnings, and deduct any losses from that amount, you are ready to start preparing your state and federal taxes. The amount you calculate should be put on your Form 1040 for your Federal Return. Itemized deductions (losses) will go against your winnings on your Schedule A form. The same methodology above can be used to complete your Massachusetts state tax return.
  3. File and Pay Your Taxes: Now that your state and federal tax returns are complete, give them one final look to ensure accuracy. If you are a tax software, such as Turbo Tax, you can electronically submit both your state and federal taxes. You also have the ability to mail in your taxes, if you prefer.

What types of gambling are taxed in Massachusetts?

In the state of Massachusetts, all forms of gambling winnings are taxable and should be reported in your total taxable income. Below are just a few examples of the types of gambling that are taxed in Massachusetts.

  • Sports Betting: The most recently launched on the list, legislation in 2023 included sports betting winnings as taxable income.
  • Casinos: Any winnings from the three brick-and-mortar casinos in Massachusetts are subject to taxes, including winnings at slot machines as well as table games including blackjack, poker, roulette, and more.
  • Horse Racing: Any winnings from horse racing betting is subject to taxes, whether it’s at a track or via off-track betting.
  • Massachusetts Lottery: All winnings from the MA lottery, including draw games and scratch-offs are subject to taxes.
  • Daily Fantasy Sports (DFS): Though they are considered games of skill, and not true gambling, winnings from DFS are also taxable.

History of gambling tax laws in Massachusetts

With the many forms of gambling now legal in Massachusetts, the tax laws have kept pace with making sure the state gets its piece of each. Let’s take a quick look at the history of gambling tax laws in Massachusetts.

  • 1900s: Starting in the early 20th century, there was only illegal gambling, and no structured tax legislation to capitalize on it. This was seen all over the country, not just MA, and continued for much of the 1900s.
  • 1971: With the establishment of the Massachusetts State Lottery, legalized gambling in the state officially began. Revenue from the lottery was subject to taxes and began helping with municipal needs including education.
  • 2011: The Massachusetts Gaming Act was officially signed into law, paving the way for resort-style casinos and slots parlors to launch. With the legislation came a 25% tax rate on gaming revenue from those casinos.
  • 2023: Following the overturning of PASPA by the United States Supreme Court five years earlier, Massachusetts officially legalized sports betting. For retail sportsbooks, a 15% tax rate was imposed, with online sportsbooks seeing a 20% tax rate.

FAQ

How do I report gambling winnings on my Massachusetts tax return?

When filing your taxes in Massachusetts, you will use the Massachusetts Form 1 (Resident Income Tax Return) or Form 1-NR/PY (Nonresident/Part-Year Resident Tax Return), depending on your residency status. For the Federal Tax Return piece, you’ll file your gambling winnings on Form 1040 under “Other Income.”

Are gambling losses deductible on my Massachusetts tax return?

Yes, gambling losses are deductible on your Massachusetts tax return, up to the amount of your winnings.

What records should I keep to prove my gambling winnings and losses?

If received from a legal gambling operator, you should keep your W-2G forms. Otherwise, hold onto ticket stubs and receipts, as well as bank statements and gambling slips from online and retail sportsbooks.

Are there any specific forms I need to fill out to report gambling taxes in Massachusetts?

Yes, for your Massachusetts state return, you’ll need to complete a Massachusetts Form 1 (Resident Income Tax Return) or Form 1-NR/PY (Nonresident/Part-Year Resident Tax Return), depending on whether or not you are officially a Massachusetts resident at the time of your winnings.