Lottery winnings · New Jersey
New Jersey lottery tax calculator
New Jersey taxes lottery winnings as ordinary income under its graduated schedule — the prize is stacked on your other income, so the rate depends on the total.
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
27.4% of the prize goes in tax · top federal rate 22.0%
- Prize
- $50,000
- Federal income tax on it
- −$10,350
- New Jersey income tax on it
- −$3,356
- You keep
- $36,294
The cheque at claim
- Federal withheld (24.0% — proceeds over $5,000)
- −$12,000
- New Jersey withheld (5.0%)
- −$2,500
- Cheque
- $35,500
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At the counter
What is withheld in New Jersey
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.
At claim, 5% is withheld for New Jersey on prizes greater than $10,000 — the state's own words: "You must withhold: 5% for payouts between $10,001 and $500,000; or ... 8% for payouts in excess of $500,000."
Worked amounts
Three prizes, cheque and bill
| Prize | Cheque at claim | Federal tax | New Jersey tax | You keep |
|---|---|---|---|---|
| $10,000 | $7,600 | −$1,550 | −$0 | $8,450 |
| $100,000 | $71,000 | −$22,114 | −$6,856 | $71,030 |
| $1,000,000 | $680,000 | −$337,180 | −$87,188 | $575,632 |
Single filer with $60,000 of other income for the year.
Questions
How much tax is taken from lottery winnings in New Jersey?
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: New Jersey taxes lottery winnings as ordinary income under its graduated schedule — the prize is stacked on your other income, so the rate depends on the total. At claim, 5% is withheld for New Jersey on prizes greater than $10,000 — the state's own words: "You must withhold: 5% for payouts between $10,001 and $500,000; or ... 8% for payouts in excess of $500,000."
Does New Jersey tax lottery winnings?
New Jersey taxes lottery winnings as ordinary income under its graduated schedule — the prize is stacked on your other income, so the rate depends on the total.
What will the cheque be on a $100,000 prize in New Jersey?
About $71,000 — the prize less $24,000 federal withholding and $5,000 New Jersey withholding. The tax actually owed for a single filer earning $60,000 elsewhere is about $28,970, so what you keep is $71,030. 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
- NJ-WT (September 2025) p.23 — Calculating Withholdings from Gambling and New Jersey Lottery Winnings — read 2026-09-02
- Form NJ-W4 — Rate Tables A–E, Annual Payroll Period column (NJ Division of Taxation) — read 2026-09-02
- NJ-WT — New Jersey Income Tax Withholding Instructions (September 2025), p.24 allowance values and method — read 2026-09-02
- NJ DOLWD — Rate information, contributions, and due dates (2026 Worker rates and taxable wage bases) — read 2026-09-02
Federal tax owed uses the 2026 rate schedules and standard deduction from Form 1040-ES. New Jersey tax uses the same rules as our New Jersey paycheck calculator. Not modelled: annuity maths, itemised deductions, local income taxes, non-resident rules. Estimates only — not tax advice.
Other states
Or start with the lottery tax calculator to compare the federal cheque, final tax bill and every state from one place.