The Michigan Super Raffle game returned to the state on June 22, with the largest first prize ever offered in the state. The top prize is a life-changing $6 million, with a further two prize payouts of $1 million each and 12 payouts of $100,000. Lesser prizes of $500 can be won by 3,500 players winners, with $100 promised to the next 15,000 lucky entrants.

There is a limit of 350,000 tickets in the Super Raffle, which makes it a very attractive prospect. Rather than competing against millions of others with the extremely long odds of winning, a smaller player pool increases the percentage chance of snagging prizes. When the last ticket is sold, the Super Raffle will close, and no additional tickets can be bought. The draw is scheduled for on or just after September 8, and the winning numbers will be published on the Michigan Lottery website on the following day.

The Michigan Super Raffle has proved extremely popular on past occasions. The first one was way back in 2007, and in 2018, Michigan players walked away with over $11.8 million in total prize money.

There are plenty of other raffles that Michigan players can enter online for those who don’t fancy their chances on the Super Raffle. For example, at the RealRaffle official site, players can enter prize draws to win everything from cash to vacations, with low ticket prices. However, most online raffles like this are capped at a lower number of entries than the state raffle, meaning the chance of winning are better, although the prizes are usually smaller.

The allure of any kind of prize money is strong, but the question that immediately arises is whether you can pocket the full payout or whether Michigan state government regulations require you to pay tax on your winnings. The answer is yes, but it’s not a direct taxation. Sure, you’ll pay the full tax amount, but you must include this in your annual individual tax return, rather than just having the tax portion of your winnings deducted before you receive the balance. That said, if you go over a specified threshold of winnings, the tax is withheld to ensure that it is indeed paid. For example, the threshold for bingo wins is $1,200 and that for a raffle is only $599. In this case, the IRS will send you a W-2G form, which records your winnings and the tax that was deducted. They strictly enforce these obligations with raffle operators to make sure the tax amount is properly withheld.

It works the other way too, which is only fair if you think about it. You are allowed to deduct the money you paid to play raffles and lotteries from your income if you don’t win anything. You also don’t have to pay taxes on the first $300 you win, whether it’s from the Michigan Super Raffle, other prize draw competitions or bingo games.

All winnings are technically subject to a tax rate of 24% in Michigan. However, this is also weighed against your total income. This means that when taken as part of your household earnings, the actual tax rate translates into the standard Michigan state income tax rate of 4.25%.

The bottom line is that, unless you win a large amount, it’s your responsibility to include Michigan Super Raffle winnings on your tax return, and to pay the required percentage. This will always vary, as raffle winnings are subsumed under personal income tax.