How Lottery Taxes Work in Every State (2026 Guide)

The advertised jackpot is not what you'd take home. Not close. Here's the full picture of how lottery winnings are taxed in the US, in plain English. (Estimates only — a real win deserves a real CPA.)

Layer 1: federal withholding (24%)

Any prize over $5,000 triggers mandatory 24% federal withholding — the lottery sends it to the IRS before you see a dollar. Win $100,000 and the check is for $76,000 minus state withholding.

Layer 2: the federal true-up (up to 37%)

Here's what surprises winners at filing time: 24% withholding is not your tax bill — it's a down payment. Lottery winnings are ordinary income, and a large prize lands you in the top 37% bracket. On a $1 million prize, roughly $130,000 more is typically due at filing beyond what was withheld. Winners who spend the whole post-withholding check learn this the hard way in April.

Layer 3: your state

State treatment ranges from zero to double digits:

• No tax on lottery winnings: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming — and notably California, which has high income taxes generally but exempts California Lottery prizes specifically.
• Modest (around 3–5%): Indiana, Pennsylvania (with a twist — PA exempts PA Lottery prizes for state tax), Ohio, Michigan, Arizona, Virginia, and others.
• Steep (8%+): New Jersey (8%), Oregon (8%), Maryland (8.75%), and the leader, New York at 10.9% — with New York City residents owing an additional ~3.9% on top.

Where you live and where you bought the ticket both matter: buy in a taxing state while living elsewhere and the purchase state generally withholds first, with credits sorted out at filing.

Lump sum vs. annuity, tax-wise

The advertised jackpot is the total of 30 annual annuity payments. The cash option is the present value — roughly 45–52% of the advertised number. Tax-wise: the lump sum is all taxed now, at top rates. The annuity spreads income across 30 years, which rarely keeps you out of the top bracket on a huge jackpot but does defer the bills and protects you from yourself. There are good arguments both ways; the right answer is the one your fiduciary advisor gives you, not your group chat.

Three mistakes that cost real money

1. Spending the withheld-only number. Budget on the after-37% number; be pleasantly surprised if you owe less.
2. Forgetting estimated taxes. A mid-size win (say $20,000) may require an estimated payment that quarter, not next April.
3. Ignoring gambling-loss deductions. If you itemize, losing tickets are deductible up to the amount of winnings. WonYet's spend tracker exists partly so you have that record.

Run your own numbers in our free lottery tax calculator — every state, lump sum and annuity, no email wall.

Always verify your results through official lottery channels before claiming any prize. WonYet is not affiliated with Powerball, Mega Millions, or any state lottery organization.