Lottery Tax Calculator

About Tax Calculator

How Much Money Can You Keep from Lottery Winnings?

We all sometimes wonder, what would it be like to win the lottery? If you’re one of the lucky  ones, winning  the lottery  can be a life-changing event and offer a level of financial freedom most people only dream about. Before you claim your big check or start planning after winning the  Powerball or Mega Millions jackpot , it’s important to understand how much you'll actually take home after taxes, and this is where a lottery  tax calculator becomes invaluable.

Key Points:                                                                                                                                                     

• If you win the lottery, it is  considered  taxable income for both federal and state taxes in some states.
• Federal tax rates can go  up to 37%.
• If you win the lottery, your income may fall into a higher tax bracket.
• Lottery winnings are not considered earned income for Social Security benefits.

Federal and State Taxes on Lottery Winnings

For some states lottery winnings are taxed as ordinary income at both the federal and state levels. For example,  if you win a lottery jackpot, your winnings  are treated as salary or wages, and you must report the full amount on your tax return. For instance, if you win $50,000 in the state of NY by hitting  all the numbers in Take 5 and that is your only income for 2024,  you must report that amount as income on your 2024 tax return. If you win a big jackpot i.e., a million dollars from Cash for Life and choose a lump-sum payment,  you must report the total amount received to the IRS.

Note : Before you get any money,  the IRS  withholds 24% of your lottery winnings. You also may owe additional taxes when you file your return, depending on your tax bracket. Using our lottery tax calculator can help you estimate your total bill.

Federal Tax Rates

The federal government taxes lottery winnings based on your  tax bracket. If you’re a high-income earner, different portions of your winnings are taxed at varying rates, which could go up to  37%. .

State Taxes on Lottery Winnings

Some states don’t pay state taxes on lottery winning like Florida and Texas, to name a few. States like New York and Maryland have state taxes that can be higher than 10%. States like Arizona and Maryland also tax non-residents who win the lottery in of state of Maryland or Arizonia .

Here’ are some examples on how some states manage lottery taxes :

1. Arizona - 4.8%
2. Arkansas - 4.4%
3. California - no state taxes for lottery prizes
4. Colorado - 4.0%
5. Connecticut - 6.99%
6. Delaware - All winning Delaware Lottery tickets are subject to Delaware Income Tax.
7. Florida - no state taxes for lottery prizes
8. Georgia - 5.49%
9. Idaho - 6.93%
10. Illinois - 4.95%
11. Indiana - 3.23%
12. Iowa - 5.0%
13. Kansas - 5.0%
14. Kentucky - 6.0%
15. Louisiana - 4.25%
16. Maine - 7.15%
17. Maryland - 8.75%
18. Massachusetts - 5.0%
19. Michigan - 4.25%
20. Minnesota - 7.25%
21. Mississippi - 3.0%
22. Missouri - 4.0%
23. Montana - 6.9%
24. Nebraska - 5.0%
25. New Hampshire - No state taxes for lottery prizes
26. New Jersey - 8.0%
27. New Mexico - 6.0%
28. New York - 10.9%
29. North Carolina - 4.75%
30. North Dakota - 2.9%
31. Ohio - 4.0%
32. Oklahoma - 4.75%
33. Oregon - 8.0%
34. Pennsylvania - 3.07%
35. Rhode Island - 5.99%
36. South Carolina - 7.0%
37. South Dakota - no state taxes for lottery prizes
38. Tennessee - no state taxes for lottery prizes
39. Texas - no state taxes for lottery prizes
40. Vermont - 6.0%
41. Virginia - 4.0%
42. Washington - no state taxes for lottery prizes
43. Washington, DC - 8.50%
44. West Virginia - 6.50%
45. Wisconsin - 7.65%
46. Wyoming - no state taxes for lottery prizes

Changing Tax Withholdings

Lottery players cannot change the federal or state tax withholding rates on  lottery winnings. However, you can use a federal tax calculator to plan for any additional taxes you may owe.

Lottery Winnings and Social Security

Lottery winnings are not considered earned income and  do not impact on your Social Security benefits. It is particularly important for senior citizens,  retirees and those receiving disability benefits to know this…

Impact on Your Tax Bracket

As mentioned above,  winning  the lottery can significantly impact your tax bracket since the IRS counts it as income. For example, an average family might see their top federal tax rate jump from 22% to 37% if they won a hefty sum of money from the lottery.

Should I Chose Lump Sum or Annuity Payments?

Having to choose between taking a lump sum payment or annuity payments is a hard decision. If you choose a  lump sum payment, you will get all the money up front after you pay the taxes and you also can start planning and spending the money or setting up investments. Most financial advisors  recommend choosing a lump sum payment because you get a higher return, and no one knows how long they will live for. Annuity payments can provide a steady income stream and potentially lower annual tax liabilities  and also may provide some protection from spending all your money at once since you get fixed payments. Before you rush to make any decision, it is recommended to build a team which consists of a financial advisor, a tax advisor and a lawyer and always remember to sign the ticket and keep it in a secure place.

Ready to Calculate Your Taxes?

If  plan on ever winning the lottery, having a plan is key. Use  the Lottery Current Lottery Tax Calculator to determine how much tax you’re going to pay in your state and how much you get to keep. Understanding your tax liabilities ensures you can enjoy your winnings with confidence. Don't forget to check the latest lottery results and see if you're the next lucky winner!