Taxes On Lottery Winnings By State 2019

There’s no doubt that winning the lottery is exciting and can significantly help the winner financially; however, the winner must not be too quick to spend all of his or her winnings. Like other income in the United States, the IRS taxes lottery winnings.

Lottery winnings are considered ordinary taxable income for both federal and state tax purposes. Winnings are taxed the same as wages or salaries are, and the total amount the winner receives must be reported on their tax return each year. Before the winner receives any of the money, however, the IRS automatically takes 24% of the winnings. The rest of the winnings are expected to be paid by the winner when filing the return.

What is the tax rate for lottery winnings? For federal taxes, lottery winnings are taxed according to the federal tax brackets. Federal tax brackets are progressive, so portions of the winnings are taxed at different rates, and could be as high as 37%. State income taxes vary by location. Some states do not have a state income tax, while others may withhold up to 8.82%.

The states that do not levy an individual income tax are:

Six states do not have a lottery: Alabama, Alaska, Hawaii, Mississippi, Nevada, and Utah. Two states, California and Delaware, do have a lottery but do not tax winnings.

If the winner buys a winning ticket in a state that they do not live in, most states will not withhold the winnings. Out of the 43 states that participate in multistate lotteries, only Arizona and Maryland tax the winnings of people who live out of state.

The ten states with the highest lottery withholding tax rates are:

  1. New York (8.82%)
  2. Maryland (8.75%)
  3. District of Columbia (8.50%)
  4. New Jersey (8.00%)
  5. Oregon (8.00%)
  6. Wisconsin (7.65%)
  7. Minnesota (7.25%)
  8. South Carolina (7.00%)
  9. Arkansas (7.00%)
  10. Connecticut (6.99%)

Below is a table with each state’s lottery tax withholding.

State Taxes on Lottery Winnings 2019 Pop.
Alabama0.00%4,898,246
Alaska0.00%735,720
California0.00%39,747,267
Delaware0.00%975,033
Florida0.00%21,646,155
Hawaii0.00%1,416,589
Mississippi0.00%2,987,895
Nevada0.00%3,087,025
New Hampshire0.00%1,363,852
South Dakota0.00%892,631
Tennessee0.00%6,833,793
Texas0.00%29,087,070
Utah0.00%3,221,610
Washington0.00%7,666,343
Wyoming0.00%572,381
North Dakota2.90%760,900
Pennsylvania3.07%12,813,969
Indiana3.23%6,718,616
Colorado4.00%5,770,545
Missouri4.00%6,147,861
Ohio4.00%11,718,568
Oklahoma4.00%3,948,950
Virginia4.00%8,571,946
Michigan4.25%10,020,472
Illinois4.95%12,700,381
Arizona5.00%7,275,070
Iowa5.00%3,167,997
Kansas5.00%2,910,931
Kentucky5.00%4,484,047
Louisiana5.00%4,652,581
Maine5.00%1,342,097
Massachusetts5.00%6,939,373
Nebraska5.00%1,940,919
North Carolina5.50%10,497,741
Georgia5.75%10,627,767
Rhode Island5.99%1,056,738
New Mexico6.00%2,096,034
Vermont6.00%627,180
West Virginia6.50%1,791,951
Montana6.90%1,074,532
Idaho6.92%1,790,182
Connecticut6.99%3,567,871
Arkansas7.00%3,026,412
South Carolina7.00%5,147,111
Minnesota7.25%5,655,925
Wisconsin7.65%5,832,661
New Jersey8.00%8,922,547
Oregon8.00%4,245,901
District of Columbia8.50%711,571
Maryland8.75%6,062,917
New York8.82%19,491,339