And that’s not a good thing.
Assume you’re an amateur gambler. You add up your winning and losing sessions for the year, and find that you have $150,000 of wins and $100,000 of losses. You get to deduct the $100,000 of losses on your federal income tax.
But if you’re a resident of Louisiana, you can’t do that on your state return. Louisiana penalizes anyone who takes itemized deductions. The formula for calculating the LA itemized deductions is:
57.5% * [(Fed. Itemized ded’ns) – (Fed. Standard ded’n)]
This is especially bad for amateur gamblers, because gamblers must include all of their wins as part of their Adjusted Gross Income but none of their losses. At least Louisiana gives a deduction from income of the amount of federal income tax you pay…
So Louisiana joins my list of states where a gambler shouldn’t reside. Here’s the complete list:
Connecticut
Illinois
Indiana
Louisiana
Massachusetts
Michigan
Minnesota (because of its AMT)
Mississippi (Only MS gambling deductions are allowed)
New York
Ohio
West Virginia
Wisconsin