Federal tax on a lottery prize works the same in every state. The state layer is where the differences are, and it depends on two places: where the ticket was bought and where you live. This page lists each lottery state's top income tax rate for 2026, explains the federal side, and covers the cases where the two states differ.
How much federal tax is taken out of lottery winnings?
There are two federal numbers, and they are easy to confuse.
24% withholding. When a prize, minus the cost of the ticket, is more than $5,000, the lottery must withhold 24% and send it to the IRS before paying you. That rule comes from the IRS instructions for Form W-2G. Nonresident aliens generally have 30% withheld instead.
Up to 37% owed. Withholding is a down payment, not the final bill. Lottery winnings are ordinary income, and a big prize pushes most of it into the 37% bracket. The gap between the 24% withheld and the roughly 37% owed is due when you file, so a jackpot winner should set it aside from the start.
Smaller prizes are taxable too, even when nothing is withheld; the IRS covers this in Topic 419, gambling income and losses. For prizes paid in 2026, the lottery issues a Form W-2G once a win reaches $2,000, up from $600 before; our article on the $2,000 W-2G threshold explains the change. For worked examples, see the federal and state tax breakdown and tax on big jackpot wins.
What is the lottery tax rate in each state?
The table shows each lottery state's top individual income tax rate for 2026, from the Tax Foundation's 2026 state rate table. A large prize is taxed mostly at the top rate. The five states without a lottery (Alabama, Alaska, Hawaii, Nevada and Utah) are left out.
| State | Top state rate on a large prize (2026) |
|---|---|
| Arizona | 2.5% |
| Arkansas | 3.9% |
| California | 0% on California Lottery prizes (top income tax rate 13.3%) |
| Colorado | 4.4% |
| Connecticut | 6.99% |
| Delaware | 6.6% |
| District of Columbia | 10.75% |
| Florida | 0% (no income tax) |
| Georgia | 5.19% |
| Idaho | 5.3% |
| Illinois | 4.95% |
| Indiana | 2.95% (plus county tax) |
| Iowa | 3.8% |
| Kansas | 5.58% |
| Kentucky | 3.5% |
| Louisiana | 3% |
| Maine | 7.15% |
| Maryland | 6.5% (plus county tax) |
| Massachusetts | 9% (includes 4% surtax on income over about $1 million) |
| Michigan | 4.25% |
| Minnesota | 9.85% |
| Mississippi | 4% |
| Missouri | 4.7% |
| Montana | 5.65% |
| Nebraska | 4.55% |
| New Hampshire | 0% (no income tax) |
| New Jersey | 10.75% |
| New Mexico | 5.9% |
| New York | 10.9% (plus up to about 3.9% for New York City residents) |
| North Carolina | 3.99% |
| North Dakota | 2.5% |
| Ohio | 2.75% |
| Oklahoma | 4.5% |
| Oregon | 9.9% (lottery withholds 8%) |
| Pennsylvania | 3.07% |
| Rhode Island | 5.99% |
| South Carolina | 6% |
| South Dakota | 0% (no income tax) |
| Tennessee | 0% (no income tax) |
| Texas | 0% (no income tax) |
| Vermont | 8.75% |
| Virginia | 5.75% |
| Washington | 0% (taxes capital gains only) |
| West Virginia | 4.82% |
| Wisconsin | 7.65% |
| Wyoming | 0% (no income tax) |
Two cautions about the table. First, the amount a lottery withholds when you claim is not always the same as the tax you end up owing. The Oregon Lottery, for instance, withholds a flat 8% on prizes of $1,500 or more, while Oregon's top income tax rate is 9.9%; the difference is settled on your Oregon return. Second, some states let counties or cities add their own income tax, notably New York City, Maryland counties and Indiana counties.
Which states don't tax lottery winnings?
Eight lottery states take nothing: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Most of them have no personal income tax at all. Washington taxes certain capital gains but not lottery prizes.
California is the odd one out. It has the highest top income tax rate in the country, 13.3%, yet the Franchise Tax Board's instructions say that California excludes California lottery winnings from taxable income. The same instructions say lottery winnings from other states are taxable by California, so a California resident who wins on a ticket bought in Arizona or Oregon pays California tax on it.
The difference adds up on a big prize. On every $10 million of taxable winnings, New York's top rate takes about $1.09 million more than a no-tax state, before any New York City tax. Our best states to buy lottery tickets post compares the states on this and other factors.
Do you pay tax where you bought the ticket or where you live?
Often both, with a credit to keep you from paying twice in full. The state where the ticket was sold usually treats the prize as income earned there and taxes it, even if you are a nonresident. Your home state then taxes you on all of your income, including the prize, and generally gives a credit for the tax you paid to the other state. In practice you end up paying roughly the higher of the two rates.
That means living in a no-tax state doesn't help if you buy the ticket somewhere that taxes prizes. A Florida resident who wins on a ticket bought in New York owes New York tax. Going the other way, a New York resident who wins on a ticket bought in Texas still owes New York tax as a resident.
Which state has the highest lottery tax?
New York. Its top rate of 10.9% applies to income above $25 million, which any jackpot of real size will cross. New York City residents also pay city income tax of up to about 3.9%. New Jersey and Washington, D.C., are next at 10.75%, followed by Oregon (9.9%), Minnesota (9.85%) and Massachusetts (9%, counting its surtax on income over about $1 million). Our page on New York lottery taxes works through examples.
Nonresident aliens and visa holders face different federal rules, covered in lottery tax for non-residents. If a large win ever makes this table personal, talk to a tax professional before you claim the prize; this page is general information, not tax advice.
Lottery tax by state: FAQ
Which states have no tax on lottery winnings?
California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. California has an income tax but excludes California Lottery prizes; winnings from other states' lotteries remain taxable for California residents. Federal tax applies everywhere.
How much federal tax is taken out of lottery winnings?
The lottery withholds 24% from prizes of more than $5,000 after subtracting the ticket cost. A large prize is taxed at up to 37%, so most big winners owe more when they file. Nonresident aliens generally have 30% withheld.
Which state has the highest lottery tax?
New York, with a top rate of 10.9% on income over $25 million, plus up to about 3.9% in city tax for New York City residents. New Jersey and Washington, D.C., are next at 10.75%.
Do you pay lottery tax where you buy the ticket or where you live?
Both can apply. The state where the ticket was sold usually taxes the prize, and your home state taxes it as part of your income, generally with a credit for tax paid to the other state.
Does the lottery withhold state tax?
Many lotteries in states with an income tax withhold state tax on larger prizes, but the withholding rate may differ from what you finally owe. Oregon, for example, withholds 8% on prizes of $1,500 or more against a top rate of 9.9%.
Sources: IRS Instructions for Forms W-2G and 5754 (01/2026); Tax Foundation, State Individual Income Tax Rates and Brackets, 2026; California FTB, 2025 Schedule CA (540) instructions; Oregon Lottery, claim a prize. Rates change with state legislation; check before acting.
