Taxable Talk

Live Free or Die may be the motto of New Hampshire, but the formerly conservative state that believed in very low taxes elected a Democratic majority in the state legislature last year. Shock of shocks, tax increases are coming. And a particularly insidious tax increase will hit gamblers.

The New Hampshire House today passed a new budget that includes numerous new taxes and tax increases. As the Manchester Union-Leader reported:

The House, by a 182-165 vote, created or increased taxes on tobacco, rooms and meals, gambling winnings, estates and capital gains. The bill, HB 2, also raises the gasoline tax, with all those funds to go toward state and local road construction and improvements.

The gambling tax is particularly bad. The new tax is 10% on all gambling winnings above $600. While proponents noted that it would only impact big-time bingo games, what will be the impact on New Hampshire residents who head to a casino? The way the legislation is written it could impact professional gamblers residing in New Hampshire, and subject them to a 10% tax on their winnings. (Frankly, the legislation is so poorly written towards gambling that it will take court cases to determine what is or isn’t being taxed.) I for one don’t think it’s worth taking a chance and for the professional gamblers out there it’s definitely time to consider voting with your feet.

So what should a New Hampshire gambler do? For the amateur gambler, you may want to consider Maine or Vermont. Unfortunately, Connecticut and Massachusetts don’t allow gambling losses while New York tax rules will cause phase-outs of itemized deductions. Professional gamblers can also consider Connecticut and Massachusetts as both states have relatively low income taxes. (Professional gamblers are allowed to net their wins and losses, so they are not impacted by the inability to deduct losses in Connecticut and Massachusetts.)

Here’s the complete list of states for gamblers to avoid:

Connecticut*
Illinois*
Indiana*
Louisiana (itemized deduction limitation)
Massachusetts*
Michigan*
Minnesota (because of its AMT)
Mississippi (Only MS gambling deductions are allowed)
New Hampshire (10% gambling tax on winnings over $600)
New York (itemized deduction limitation)
Ohio*
West Virginia*
Wisconsin*

*Losses not allowed; impacts amateurs only

This entry was posted on Thursday, April 16th, 2009 at 8:14 pm and is filed under Gambling, New Hampshire. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.