How much tax do you pay on lottery winnings?

Lottery winnings are subject to federal income tax (24% is withheld immediately, but the top bracket of 37% applies to winnings over $609,350) plus state income tax which varies from 0% to 10.9% depending on your state. Some states like Florida, Texas, and California do not tax lottery winnings.

Is it better to take the lump sum or annuity?

The lump sum is typically about 50-60% of the advertised jackpot. While the annuity pays out the full amount over 29 years, the lump sum lets you invest the money immediately. The better choice depends on your financial situation, tax bracket, and investment strategy.

Which states don't tax lottery winnings?

Nine states do not tax lottery winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming, and Alaska (which doesn't sell lottery tickets). Additionally, Nevada, Alabama, Hawaii, and Utah don't participate in Powerball or Mega Millions.

← Back to Dashboard

Lottery Tax Calculator

Estimate your take-home amount after federal and state taxes on Powerball and Mega Millions winnings.

Jackpot Amount ($)

Your State

Filing Status

How Lottery Taxes Work

When you win a lottery jackpot, your winnings are subject to both federal income tax and (in most states) state income tax. The IRS automatically withholds 24% of the gross payout for federal taxes. However, since large lottery winnings push you into the top federal tax bracket of 37%, you'll owe additional taxes when you file your return.

State tax rates vary widely — from 0% in states like Florida and Texas to as high as 10.9% in New York. Some states also impose local/city taxes on lottery winnings.

Lump Sum vs. Annuity

Jackpot winners have two payout options:

Lump Sum (Cash Option): Receive approximately 50–60% of the advertised jackpot as a single payment. You get the money immediately but the gross amount is lower.
Annuity: Receive the full advertised jackpot paid out in 30 graduated annual payments over 29 years. Each payment increases by about 5% to account for inflation.

Most financial advisors note that the lump sum can be advantageous if invested wisely, as the returns may exceed the annuity value. However, the annuity provides guaranteed income and may result in lower taxes in individual years.

States With No Lottery Tax

These states do not tax lottery winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Alaska doesn't sell lottery tickets. Nevada, Alabama, Hawaii, and Utah don't participate in Powerball or Mega Millions.

Disclaimer: This calculator provides estimates only. Actual tax liability depends on your complete financial situation, deductions, and applicable tax laws. Consult a qualified tax professional for advice specific to your circumstances.