Lottery Winnings Tax by State: 2026 Rates for Every State

Win $1 million in Texas and the lottery hands you $760,000. Win the same prize as a Maryland resident and you get $665,000. Neither check is the final number, because the lottery only withholds part of the tax, and the rest comes due when you file.

Lottery winnings are taxed as income by the IRS everywhere in the US, and by most states. How much your state takes depends on where you live and where you bought the ticket. The table below gives every state’s 2026 rate and what its lottery withholds, each taken from the state’s own revenue department, tax law or lottery.

How much tax do you pay on lottery winnings?

The IRS taxes lottery winnings as ordinary income, so a big prize is taxed at your top bracket, which reaches 37% in 2026. When a prize is more than $5,000, the lottery withholds 24% for the IRS before paying you. That 24% is a down payment, not the full bill, so a big winner usually owes more when they file.

Here’s how that works on a $1 million lump sum, for a single filer with no other income who takes the standard deduction, using the IRS’s 2026 brackets (opens in a new tab):

State tax comes on top of that. In Texas there’s none, so the Texas winner keeps about $680,000. A Maryland resident pays the state and their county too, which is why the Maryland Lottery withholds 33.5% in total at the counter.

The withholding rule comes from the IRS instructions for Form W-2G (opens in a new tab): 24% of the prize minus what you paid for the ticket. The lottery reports a prize to the IRS on that form when it’s $2,000 or more in 2026 (up from $600) and at least 300 times the ticket price, but every win is taxable whether a form shows up or not.

Which states don’t tax lottery winnings?

Nine states have no income tax that reaches lottery winnings: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Alaska and Nevada don’t run a lottery, so seven of them sell tickets. California also doesn’t tax California Lottery prizes, though it does tax its residents on prizes won in other states.

New Hampshire’s tax on interest and dividends never reached lottery prizes, and it was repealed from January 1, 2025 (opens in a new tab) anyway. In California, the Franchise Tax Board says (opens in a new tab) prizes from other states’ lotteries are taxable, at the regular California rates (opens in a new tab) that top out at 12.3%.

Delaware is the one most lists get wrong. It’s often named as a state that doesn’t tax lottery winnings, but the Delaware Lottery says (opens in a new tab) “all winning Delaware Lottery tickets are subject to Delaware Income Tax.” What Delaware doesn’t do is withhold, so a resident who wins there pays up to 6.6% when they file, with nothing set aside for it.

Not having a lottery doesn’t mean a state skips the tax on prizes. Alabama, Hawaii and Utah don’t sell tickets, but their residents owe state income tax on a prize won anywhere else.

Lottery tax rates by state (2026)

State tax on lottery winnings runs from nothing in nine states to 10.9% on a New York Lottery prize, the highest any state charges on its own lottery’s prizes, before any city tax. The rate column shows the flat rate, or the top rate a large prize reaches. The second column is what the state’s lottery withholds when you claim, which isn’t always the same as what you’ll owe. Each figure links to its source.

“Rate not published” means the lottery withholds state tax but we couldn’t find the rate on any official page. Four states cut their rates partway through 2026 and made the cut apply to the whole year: Arkansas, South Carolina, Utah and West Virginia.

Some states leave smaller prizes out

New Jersey doesn’t tax a New Jersey Lottery prize of $10,000 or less, though it taxes a prize of any size won in another state. Idaho, Missouri and Virginia don’t tax a prize under $600 from their own lottery. Pennsylvania taxes cash prizes from the Pennsylvania Lottery, but not prizes paid as goods (opens in a new tab), like a car.

Why the withholding doesn’t match the rate

The amount taken at the counter is set by each state’s withholding rule, not by what you’ll owe. Colorado withholds 4% against a 4.4% rate, and New Jersey withholds 5% to 8% against a top rate of 10.75%, so winners in both states owe more when they file. Maryland goes the other way. Its 9.5% covers the state and your county together, which is more than a smaller prize will owe, so part of it comes back as a refund when you file.

Where a city or county takes a cut too

Some states let local governments tax income, and a prize counts.

• New York City and Yonkers. City residents pay New York City tax of up to 3.876% on top of the state’s rate, and the state withholds both (opens in a new tab). Yonkers residents pay a surcharge of 16.75% of their state tax.
• Maryland. Every county taxes income, at 2.25% to 3.30% in 2026.
• Indiana. Each county sets its own rate on top of the state’s 2.95%.
• Ohio. Most cities tax lottery winnings, and so do school districts that tax all income rather than only wages.

A $1 million prize may not reach the top rate

New York’s 10.9% starts at $25 million, so a $1 million winner is mostly taxed at 6.85%, and at 9.65% above $1,077,550. DC’s 10.75% applies only to income over $1 million, and Maine and Massachusetts add their surcharges only above about the same line.

What if you bought the ticket in another state?

Then both states can tax the prize. The state that sold the ticket usually taxes it as income earned there and withholds before paying you, and your home state taxes all of your income. Most states with an income tax give their residents a credit for tax paid to another state, so you end up paying about the higher of the two rates, not both in full.

That rule follows the ticket, so it applies to Powerball and Mega Millions too. A New Jersey resident who buys a Powerball ticket in Pennsylvania pays Pennsylvania’s 3.07% on the prize, then New Jersey tax on top, less a credit for what Pennsylvania took. There are exceptions:

• DC doesn’t tax nonresidents. Its lottery skips withholding for a winner who shows they live elsewhere and leaves the tax to their home state.
• California’s exemption covers everyone. A California Lottery prize isn’t taxed by California, whether you live there or not.
• A no-tax home state has nothing to credit. A Texas resident who wins in Oklahoma pays Oklahoma’s tax, and Texas adds nothing.

If you don’t live in the US

A winner who isn’t a US citizen or resident has 30% withheld for the IRS instead of 24%, unless a tax treaty says otherwise, according to IRS Publication 515 (opens in a new tab). Canadians get one break other foreign winners don’t: the IRS lets them deduct gambling losses (opens in a new tab) against those winnings, by filing a 1040-NR. They don’t owe anything at home, since Canada doesn’t tax lottery winnings at all.

Does taking the annuity lower the tax?

Usually not by much. The IRS taxes a lump sum in the year you take it and an annuity as each payment arrives (opens in a new tab), at the rates in force that year. A jackpot’s yearly payments are large enough that most of each one still lands in the 37% bracket, so the rate barely moves.

What the annuity changes is when you pay, and the rules you pay under. You’re taxed on each payment at whatever the federal and state rates are that year, which can rise or fall over the decades the payments run. Your lottery sets how long you have to choose, so ask before you claim, and get tax advice first. Our guide to what to do if you win the lottery compares the two payouts on a real Powerball jackpot.

Can you lower the tax on lottery winnings?

Only a little. The one rule that lowers the tax itself is the deduction for gambling losses. If you itemize, the cost of losing lottery tickets and other gambling losses can be deducted up to the amount you won. From 2026, the One Big Beautiful Bill Act limits the deduction (opens in a new tab) to 90% of those losses, and you’ll need records, such as the losing tickets.

Giving money away doesn’t lower it, since the tax on the prize is yours either way. It doesn’t usually cost extra tax either. You can give up to $19,000 a person in 2026 without filing anything, and gifts above that only use up your $15 million lifetime exemption, according to the IRS’s gift tax FAQ (opens in a new tab).

Because withholding usually falls short on a big prize, the IRS expects you to pay the rest through estimated tax (opens in a new tab) during the year rather than waiting to file. A tax professional can work out the amount and the dates.

What if the tickets were free?

Every number on this page assumes you won, and most tickets lose. With Lodavo, a free prize-linked savings app, the tickets for its weekly cash prize draws cost nothing. You get them for saving, and the more you save, the more you get. The money stays in your own account, so a week without a win still ends with everything you saved.

This page is general information, not tax advice. Rates are for the 2026 tax year, and states change them often, so check with your state’s revenue department or a tax professional before you file.