Lottery Tax by State 2026: How Much Do You Really Keep?
A complete breakdown of federal and state lottery taxes — exact rates, the lump sum vs annuity decision, and state-by-state take-home for all 50 states.
Quick Answer
Federal tax on lottery winnings is 24% withheld immediately, with a top federal rate of 37% at filing. State taxes range from 0% (Florida, Texas, California, and 6 others) to 10.9% (New York). On a $100M Powerball lump sum (~$60M cash), a Florida winner keeps about $37.8M; a New York winner keeps about $31.3M.
Calculate Your Exact Take-Home
Enter any prize amount → see federal + state taxes for your state → lump sum vs annuity comparison.
The IRS treats lottery prizes as ordinary income — the same as wages or business income. A large jackpot pushes all of it into the top federal bracket.
Step 1: Immediate Withholding (24%)
For prizes over $5,000, the lottery withholds 24% federal income taxbefore cutting your check. This is prepaid tax — not your final bill. On a $10 million prize, that's $2.4M taken immediately. You receive a Form W-2G documenting the withholding.
Step 2: Filing Your Return (Up to 37%)
When you file your annual tax return, the lottery winnings are added to your other income. For 2026, the 37% bracket applies to taxable income above $626,350 (single) or $751,600 (married filing jointly). Any large jackpot will hit this bracket. You owe the remaining ~13% (37% minus the 24% already withheld) plus applicable state taxes.
Non-resident aliens face a flat 30% withholding (or lower under a tax treaty) with no ability to claim standard deductions.
State Lottery Tax Rates — All 50 States
State taxes are applied on top of federal taxes. The table below shows every state with a lottery. Use the links to access your state's tax calculator for a precise take-home estimate.
Rates current as of 2026. Tax laws change. Use the tax calculator for precise current estimates. Source: IRS Topic 419.
Lump Sum vs Annuity: The Tax Difference
Lump Sum (Cash Value Option)
The lump sum pays roughly 55-60% of the advertised jackpot immediately (the exact percentage varies by jackpot size and current interest rates). The discount exists because the lottery advertises the annuity value — the total paid over 29 years in 30 graduated payments — but you receive the present value of those future payments upfront.
All of the lump sum is taxable in the year you receive it, hitting the 37% federal bracket immediately. For a $300M jackpot: lump sum ≈ $180M → federal tax (37%) ≈ $66.6M → state tax varies → take-home $90M–$110M depending on state.
Annuity (30 Annual Payments)
The annuity pays the full advertised amount over 29 years (Powerball) or 26 years (Mega Millions), with each payment increasing by 5% per year. Each payment is taxed as ordinary income in the year received.
Annuity payments on large jackpots still hit the 37% bracket every year, so the tax rate isn't meaningfully lower. The advantage of the annuity is receiving 100% of the advertised jackpot over time. The lump sum advantage is immediate control and investment opportunity.
Factor
Lump Sum
Annuity
Amount received
~60% of jackpot upfront
100% over 29–30 years
When taxed
All in year 1
Each year over 29–30 years
Federal bracket
37% on full amount
37% on each payment
Investment control
Full control immediately
Fixed schedule
Death/estate
Estate inherits full lump sum
Payments continue to estate
Real Example: $200M Powerball, Florida vs New York
Let's walk through a concrete example for a single filer choosing the lump sum:
Advertised jackpot: $200,000,000
Lump sum cash value (60%): $120,000,000
Federal tax (37%): −$44,400,000
Florida (0% state tax) take-home: $75,600,000
New York state tax (10.9%): −$13,080,000
New York take-home: $62,520,000 (before NYC local tax)
NYC local tax adds up to 3.876%: −$4,651,200
NYC resident take-home: ~$57,869,000
The difference between winning in Florida vs NYC on a $200M jackpot: over $17.7M.
Where You Buy the Ticket Matters
State taxes apply based on where you purchase the ticket, not where you live. However, if you live in a different state, your home state may also tax the winnings (most states tax residents on all worldwide income). You can typically claim a credit in your home state for taxes already paid in the purchasing state to avoid full double-taxation — but the rules vary. Consult a tax professional for multi-state situations.
Reporting and Claiming
Prizes over $600: Must be claimed at the lottery office (not a retailer) and reported to the IRS.
Prizes over $5,000: Automatic 24% federal withholding. You receive Form W-2G.
Form W-2G is included with your federal tax return.
Group wins: each member receives their own W-2G for their share.
Claim deadlines vary by state — typically 90 days to 1 year from the draw date.
Tips for Lottery Winners
Don't sign the ticket immediately — consult a tax attorney and financial advisor first to explore trust or LLC options.
Use the annuity to spread tax brackets — only relevant if the jackpot is small enough that annual payments don't hit 37%.
Charitable donations reduce taxable income — large donations in the year of winning can offset income.
Stay-of-residency planning — relocating to a no-tax state before claiming is legally allowed but complex; consult a professional.
Federal withholding is not your final bill — budget for the additional ~13% due at filing.
This article is for general educational purposes only and does not constitute tax, legal, or financial advice. Tax rates and laws change. Consult a qualified tax professional for advice specific to your situation.
Frequently Asked Questions
How much federal tax do you pay on lottery winnings?
The federal government withholds 24% on prizes over $5,000. However, your total federal liability at tax filing is up to 37% — the top marginal rate. You'll owe the difference (about 13%) when you file your annual return. For a $10 million prize, that's roughly $3.7 million in federal taxes.
Which states have no tax on lottery winnings?
Nine states have 0% state lottery tax: California, Delaware, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Note: California exempts lottery winnings even though it has a high income tax for other income. Alabama, Alaska, Hawaii, Nevada, and Utah have no state lottery at all.
Is lump sum or annuity taxed less?
The annuity spreads payments over 29–30 years, so each annual payment is smaller — but large jackpots still hit the 37% bracket every year. The lump sum is taxed all at once in the year you win. Neither option avoids the top bracket on large jackpots; the lump sum gives you the money sooner for investing, while the annuity provides the full advertised amount over time.
Do you pay taxes where you live or where you bought the ticket?
You pay state tax in the state where you purchased the ticket. If you live in a different state, you may also owe taxes in your home state (most states tax their residents on all income, including out-of-state lottery wins). You can typically claim a credit in your home state for taxes paid in the other state to avoid full double taxation.
How much is the lottery tax on $1 million?
On a $1 million prize, federal withholding is $240,000 (24%) upfront, with an additional ~$130,000 owed at filing (37% total federal). In a no-tax state like Florida, take-home is roughly $630,000. In New York (10.9% state tax), it drops to about $521,000 before NYC local tax.
What is Form W-2G?
Form W-2G is issued by the lottery for prizes over $600. For prizes over $5,000, federal tax is automatically withheld and reported on this form. You must include this form when filing your annual federal tax return. If you win as part of a group, each member receives their own W-2G for their individual share.