Lottery winnings · Arizona
Arizona lottery tax calculator
Arizona taxes lottery winnings as ordinary income at its flat 2.50%, after the same allowance or deduction that applies to wages.
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
23.2% of the prize goes in tax · top federal rate 22.0%
- Prize
- $50,000
- Federal income tax on it
- −$10,350
- Arizona income tax on it
- −$1,250
- You keep
- $38,400
The cheque at claim
- Federal withheld (24.0% — proceeds over $5,000)
- −$12,000
- Arizona withheld (rule not transcribed yet)
- —
- Cheque
- $38,000
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At the counter
What is withheld in Arizona
Federal first, everywhere: on proceeds over $5,000 the payer withholds 24% of the whole amount — not the part over the line — and reports it on Form W-2G. That is a prepayment. The tax is settled on your return.
Arizona may also withhold state tax at the counter on larger prizes. That rule has not yet been transcribed from the state's own source, so the calculator shows the Arizona tax you will owe and leaves the at-claim line blank rather than guess.
Worked amounts
Three prizes, cheque and bill
| Prize | Cheque at claim | Federal tax | Arizona tax | You keep |
|---|---|---|---|---|
| $10,000 | $7,600* | −$1,550 | −$250 | $8,200 |
| $100,000 | $76,000* | −$22,114 | −$2,500 | $75,386 |
| $1,000,000 | $760,000* | −$337,180 | −$25,000 | $637,820 |
Single filer with $60,000 of other income for the year. * Federal withholding only — the Arizona at-claim rule has not been transcribed, so the real cheque may be smaller.
Questions
How much tax is taken from lottery winnings in Arizona?
Two layers. Federal: the payer withholds 24% on proceeds over $5,000, and the prize is then taxed on your return as ordinary income at the 2026 rates — up to 37%. State: Arizona taxes lottery winnings as ordinary income at its flat 2.50%, after the same allowance or deduction that applies to wages. Arizona may also withhold state tax at the counter on larger prizes. That rule has not yet been transcribed from the state's own source, so the calculator shows the Arizona tax you will owe and leaves the at-claim line blank rather than guess.
Does Arizona tax lottery winnings?
Arizona taxes lottery winnings as ordinary income at its flat 2.50%, after the same allowance or deduction that applies to wages.
What will the cheque be on a $100,000 prize in Arizona?
About $76,000 — the prize less $24,000 federal withholding. The tax actually owed for a single filer earning $60,000 elsewhere is about $24,614, so what you keep is $75,386. Your own figure depends on your other income and filing status.
Is the withholding the same as the tax?
No. Withholding is a prepayment at a flat rate the IRS sets for everyone. The tax is worked out on your return from your total income. If your bracket is above 24% you owe the difference in April; if it is below, the excess comes back as a refund. On a jackpot the gap is large — roughly a third of the federal tax is still owed after the 24% is taken.
Where these figures come from
- IRS Instructions for Forms W-2G and 5754 (Rev. January 2026) — regular gambling withholding, lotteries — read 2026-08-26
- Arizona Form A-4 (2026), Withholding Percentage Election — read 2026-08-22
- Arizona DOR — Withholding Calculations — read 2026-08-22
Federal tax owed uses the 2026 rate schedules and standard deduction from Form 1040-ES. Arizona tax uses the same rules as our Arizona paycheck calculator. Not modelled: annuity maths, itemised deductions, local income taxes, non-resident rules. Estimates only — not tax advice.
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