Lottery winnings
The lottery withholds 24%. The tax is not 24%.
A prize is ordinary income, taxed at your bracket on top of everything else you earn. Here is the cheque, the real bill, and the gap between them.
Lump sum: enter the cash option, not the advertised jackpot. Annuity: enter one year's payment.
The prize is stacked on top of this. It decides which bracket the winnings land in — and whether the 24% withheld was too much or too little.
What you keep after taxes
20.7% of the prize goes in tax · top federal rate 22.0%
- Prize
- $50,000
- Federal income tax on it
- −$10,350
- Texas income tax on it
- −$0
- You keep
- $39,650
The cheque at claim
- Federal withheld (24.0% — proceeds over $5,000)
- −$12,000
- Texas withheld (no state income tax)
- −$0
- Cheque
- $38,000
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Two different numbers
The cheque and the bill
At claim — withholding
On proceeds over $5,000 the payer must withhold a flat 24% for federal income tax — on the whole amount, not the part over the line. Some states withhold their own slice at the same moment. What is left is the cheque.
Same rate for everyone, regardless of income. It cannot be right for most people; it is not trying to be.
After filing — tax
The prize goes on your return as ordinary income, on top of your salary, and is taxed at the 2026 rate schedule. For a jackpot that means 37% on nearly all of it. For a $10,000 prize it can mean 12% — or nothing, if the standard deduction ($16,100 single) has room.
The difference between this and the withholding is settled in April: owed if the bracket is above 24%, refunded if below.
Worked amounts
What 24% misses
| Prize | Withheld (24%) | Federal tax owed | Settle in April | You keep |
|---|---|---|---|---|
| $1,000 | −$0 | −$120 | owe $120 | $880 |
| $10,000 | −$2,400 | −$1,550 | refund $850 | $8,450 |
| $50,000 | −$12,000 | −$10,350 | refund $1,650 | $39,650 |
| $100,000 | −$24,000 | −$22,114 | refund $1,886 | $77,886 |
| $1,000,000 | −$240,000 | −$337,180 | owe $97,180 | $662,820 |
| $10,000,000 | −$2,400,000 | −$3,667,180 | owe $1,267,180 | $6,332,820 |
Federal only, single filer with $60,000 of other income for the year. Pick a state in the calculator, or open its page below, for the state line.
By state
Where the state takes a slice
Every state below taxes winnings as ordinary income under the same rules as its paycheck calculator — those rates are transcribed from each state's own publication. The "at claim" column is what the lottery withholds at the counter; it is shown only where that rule has been read from the state's own source, and marked where it has not.
| State | Income tax on the prize | Withheld at claim |
|---|---|---|
| Illinois | flat 4.95% | 4.95% on prizes of $1,000 or more |
| North Carolina | flat 4.09% | not transcribed yet |
| Colorado | flat 4.40% | not transcribed yet |
| Georgia | flat 4.99% | not transcribed yet |
| Michigan | flat 4.25% | 4.25% on prizes greater than $5,000 |
| Pennsylvania | flat 3.07% | 3.07% on prizes greater than $5,000 |
| Arizona | flat 2.50% | not transcribed yet |
| Kentucky | flat 3.50% | not transcribed yet |
| Louisiana | flat 3% | not transcribed yet |
| Arkansas | graduated — worked from the state schedule | not transcribed yet |
| Ohio | graduated — worked from the state schedule | not transcribed yet |
| Utah | graduated — worked from the state schedule | not transcribed yet |
| Texas | none — no state income tax | none |
| Florida | none — no state income tax | none |
| Nevada | none — no state income tax | none |
| Tennessee | none — no state income tax | none |
| Wyoming | none — no state income tax | none |
| South Dakota | none — no state income tax | none |
| Alaska | none — no state income tax | none |
| New Hampshire | none — no state income tax | none |
| Washington | none — no state income tax | none |
Questions
How much tax do you pay on lottery winnings?
Federally, whatever your bracket says. A prize is ordinary income: it goes on your return on top of your salary and is taxed at the 2026 rates, so a small prize can be taxed at 12% and a jackpot at 37% on almost all of it. The 24% you hear about is not the tax — it is what the lottery withholds before writing the cheque. Then your state taxes it under its own income tax, unless you live in one of the states with none.
Why did the lottery only take 24%?
Because that is the rate the IRS tells payers to withhold on gambling proceeds over $5,000 — a flat prepayment, the same for everyone. It is not a guess at your tax. On a jackpot the top federal rate is 37%, so 24% withholding leaves roughly a third of the tax still owed when you file. On a $10,000 prize won by someone with little other income, 24% is too much and comes back as a refund.
Is the 24% taken from the whole prize or just the part over $5,000?
The whole proceeds. The IRS instructions are explicit: regular gambling withholding "is figured on the total amount of gross proceeds (the amount of winnings minus the amount wagered), not merely on the amount in excess of $5,000." A prize of exactly $5,000 on a $2 ticket has proceeds of $4,998 and nothing is withheld; a $5,010 prize is withheld on in full.
Lump sum or annuity — which is taxed less?
Neither is taxed at a lower rate; the difference is timing and amount. The lump sum is a smaller number (the cash value, typically around half the advertised jackpot) taxed once, mostly at 37%. The annuity spreads a larger total across 30 payments, each stacked on that year's other income — for a very large prize most of each payment still lands in the top bracket, so the saving is smaller than people expect. Enter whichever amount you will actually receive.
Do I pay state tax on lottery winnings?
Depends on the state. Texas, Florida, Nevada, Tennessee, Wyoming, South Dakota, Alaska, New Hampshire, Washington have no state income tax, so the federal bill is the whole bill. The other states in this calculator tax winnings as income at their ordinary rates, and several withhold at the counter — Pennsylvania takes 3.07% on prizes greater than $5,000, Michigan 4.25%, Illinois from $1,000. Some states exempt their own lottery's prizes — California excludes California Lottery winnings from state income tax (FTB Schedule CA instructions); it is not yet in this roster.
Can I deduct the cost of losing tickets?
Only if you itemise, and only up to the amount of winnings you report. For most winners the standard deduction is larger than their itemised total, so in practice the losing tickets do nothing. The calculator uses the standard deduction.
Where these figures come from
- IRS Instructions for Forms W-2G and 5754 (Rev. January 2026) — regular gambling withholding, lotteries — read 2026-08-26
- PA Department of Revenue — Lottery Winnings (3.07% applies to PA Lottery cash prizes; withheld on prizes greater than $5,000) — read 2026-08-26
- Illinois Department of Revenue — Pub-130, Withholding Illinois Income Tax for Lottery or Gambling Winnings — read 2026-08-26
- Michigan Lottery — prize claim FAQ (24% federal and 4.25% state withheld on prizes greater than $5,000) — read 2026-08-26
Federal tax owed uses the 2026 rate schedules and standard deduction from Form 1040-ES. State tax uses the same engine and sources as our paycheck calculators, across 21 states. Not modelled: annuity maths, itemised deductions, local income taxes, non-resident rules. Estimates only — not tax advice.