Lottery Tax Calculator

For a single filer with $60,000 of other income, a $1 million prize adds about $337,180 of federal income tax in 2026, an effective rate of about 33.7%. The lottery withholds 24% ($240,000) when you claim, so you would owe roughly $97,180 more when you file, plus any state and local tax.

The annuity pays the full advertised jackpot over 30 years and usually totals more after tax, because each payment is taxed in its own year. The lump sum is much smaller, but you get the money now and can invest it, pay off debt, or plan your estate. Many winners take the lump sum for control and flexibility; the annuity protects against overspending and spreads the tax. A fee-only financial planner and a tax professional can help you decide before you claim.

California and Delaware do not tax state lottery winnings even though they have an income tax. States with no individual income tax on wages also do not tax lottery prizes: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Some of those states do not run a lottery at all. Federal tax still applies everywhere.

Federal law requires the lottery to withhold a flat 24% on prizes over $5,000, including each annuity payment when the total prize is over $5,000, even if a single payment is smaller. That is a prepayment, not your final tax. Winnings are ordinary income, and a large jackpot pushes most of the prize into the 37% bracket, so the 24% withheld usually falls short. The difference is due when you file, and you may need to make estimated tax payments to avoid an underpayment penalty.

Only if you itemize deductions on Schedule A, and only up to the amount of your gambling winnings. Starting in 2026, deductible gambling losses are also limited to 90% of the losses. You need records like tickets, receipts, or statements. For most people with a large jackpot, losing tickets make little difference to the total tax.

Generally, the state where you bought the ticket can tax the prize as income sourced there, and your home state can tax it too because it taxes residents on all income. Your home state usually gives a credit for tax paid to the other state, so you pay roughly the higher of the two rates rather than both. Rules vary by state, so check with both states before filing.

When a lottery pool or office group shares a prize, the person who claims it files Form 5754 with the lottery. The lottery then issues a separate Form W-2G to each member for their share, and each person pays tax only on their portion. Without Form 5754, the claimant may be treated as receiving the whole prize and giving gifts to the others.

The annuity option pays the advertised jackpot in 30 graduated payments: one right away and then 29 annual payments, each 5% larger than the one before. On a $100 million jackpot, the first payment is about $1.5 million and the last is about $6.2 million. Each payment is taxable in the year you receive it.