Lottery Tax Calculator

Withholding at the claim office vs the tax you owe

For a state lottery prize, the payer must withhold 24% for federal income tax when the winnings minus the cost of the ticket are more than $5,000. The prize is reported to you and the IRS on Form W-2G.

That 24% is only a down payment. Lottery winnings are ordinary income, and any prize large enough to make headlines pushes most of it into the 37% bracket. The gap is due when you file, or earlier through estimated payments.

What changed for 2026: the W-2G threshold

For payments made in calendar year 2026, a lottery must issue Form W-2G when a prize is at least $2,000 and at least 300 times the ticket price. The threshold was $600 for prizes paid through 2025. A smaller win that doesn’t get a W-2G is still taxable income and still belongs on your return.

If you don’t give the lottery your taxpayer identification number, it applies 24% backup withholding to the winnings.

Lump sum or annuity

Jackpot games such as Powerball let winners take a one-time lump-sum payment or an annuity paid in 30 graduated payments over 29 years. Enter the lump-sum amount the lottery quotes if you plan to take cash.

Tax treatment differs mainly in timing. A lump sum is taxed all in one year, almost entirely at 37%. Annuity payments are taxed in the year you receive each one, and the payer issues a W-2G every year. Spreading income can keep some of each payment in lower brackets, but with a large jackpot each annual payment still reaches the top bracket, so the difference is smaller than many expect. The annuity also exposes you to future changes in tax rates and in your state of residence.

State taxes on lottery winnings

States with no income tax — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming — generally do not tax lottery prizes as income. Elsewhere, winnings are usually taxed like other income at the state’s rates. In New York, for example, the state income tax on a $1,000,000 prize for a single filer with no other income is about $65,337 before any New York City or Yonkers tax.

Which state taxes the prize can depend on both where you bought the ticket and where you live. Check with the revenue department of the state that issued the ticket and of your home state.

After a big win: practical tax steps

• Plan an estimated tax payment for the quarter you are paid. With only 24% withheld on a multimillion-dollar prize, you will almost certainly owe $1,000 or more, which triggers the estimated tax rules.
• If you share a ticket with co-workers or family, the payer can issue a separate W-2G to each winner when Form 5754 is filed. Without it, the person who claims the prize may be taxed on all of it.
• Gambling losses — including losing tickets — can only be deducted if you itemize, and never for more than the gambling winnings you report. You need a diary or similar records plus tickets and statements to support them.
• Talk to a CPA or tax attorney before claiming a large prize. Gift and estate tax rules apply to money you give away afterwards and are beyond what this calculator models.

Smaller wins: scratch-offs and second-tier prizes

Most winners never see the 24% withholding, because it only applies to winnings over $5,000. A $3,000 scratch-off prize is paid in full, gets a Form W-2G if it is at least 300 times the ticket price (a $10 ticket or cheaper), because it is above the 2026 $2,000 reporting threshold, and is taxed at your ordinary rate when you file. For a single filer who also earns $50,000 in wages, it adds about $360 of federal income tax — money that will come out of a refund or add to a balance due if you don’t set it aside.

Winnings from different games are added together on your return. Several small prizes in a year can add up to a meaningful tax bill even though no single one was withheld or reported.