Calculate your lottery tax by state. See federal and state tax on Powerball and Mega Millions winnings with lump sum and annuity payout comparison.
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Lottery winnings are taxed as ordinary income at both the federal and state level. The IRS automatically withholds 24% on prizes over $5,000, but your actual federal tax rate can reach 37% depending on total income and filing status. State taxes range from 0% to over 13% in states like New York. Use our calculator to see your exact take-home amount.
The IRS treats lottery winnings as ordinary taxable income. When you win a prize over $5,000, the lottery agency automatically withholds 24% for federal taxes. However, because most large prizes push winners into the top 37% bracket, you typically owe additional federal tax when you file your return. State taxes apply on top, ranging from 0% in states like Texas and Florida to 10.9%+ in New York. Your actual tax depends on the jackpot size, your filing status, other income, and whether you choose a lump sum or annuity payout.
Formula
Net = Gross Winnings - Federal Tax - State TaxCalculate your exact after-tax amount using progressive federal tax brackets, not just the flat 24% withholding rate.
See which payout option results in more after-tax money with a detailed side-by-side comparison.
State lottery taxes vary from 0% to over 13%. See rates for all 50 states including states with no lottery tax.
See a bracket-by-bracket breakdown showing exactly how much of your winnings is taxed at each rate from 10% to 37%.
Know your tax bill before claiming your prize so you can plan for additional taxes owed and avoid surprises at filing time.
Calculate your take-home amount on multi-million dollar jackpots with accurate federal and state tax deductions.
Figure out taxes on prizes from $10,000 to $1 million from instant games and state lottery drawings.
Know your complete tax bill before choosing between lump sum and annuity payout options.
Compare how much you would keep in different states to understand the impact of state lottery tax rates.
Help clients understand lottery windfall tax implications with detailed bracket breakdowns and payout comparisons.
Federal tax is withheld at 24% upfront, but your actual rate can be up to 37% based on total income. State taxes add 0% to 13%+ depending on where you live. Total effective tax rates typically range from 35% to 50%.
Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. California, Pennsylvania, and North Dakota also don't tax lottery winnings specifically.
Lump sum gives you roughly 52% of the jackpot upfront but is taxed at higher brackets all at once. Annuity spreads 30 graduated payments over 29 years, potentially keeping each payment in lower brackets. Most financial advisors recommend lump sum for investment flexibility.
A $1 billion jackpot lump sum (around $520 million) after federal tax at the 37% bracket plus a typical 5% state tax results in approximately $300-320 million take-home. The annuity option yields roughly $580-620 million total after taxes over 30 years.
Lottery agencies must withhold 24% on prizes over $5,000. However, if your total income puts you in the 37% bracket (as most large prizes do), you will owe an additional 13% or more when filing your tax return.
Each annual annuity payment is taxed as ordinary income in the year you receive it. Powerball and Mega Millions use graduated payments that increase about 5% per year, which may push later payments into higher tax brackets.
Strategies include choosing annuity payments to stay in lower brackets, making charitable donations for itemized deductions, setting up trusts, and gifting up to $18,000 per person per year tax-free. Always consult a tax professional.
Both can apply. The ticket purchase state typically withholds its state tax. If your home state has a different rate, you owe the difference or receive credit when filing. Some winners strategically purchase in no-tax states.