馃Ь Lottery tax calculator
A scratch-off win is taxable income. This works out what the lottery holds back when it pays you, and why that is not the same as what you end up owing.
The federal rule
A lottery withholds 24% for federal tax when the proceeds of a win are more than $5,000. Proceeds means the prize minus what you paid for the ticket, so a $5,010 win on a $10 ticket is $5,000 of proceeds and falls under the threshold. This comes from the IRS instructions for Form W-2G, checked September 2026.
Below that threshold nothing is withheld, which is not the same as nothing being owed. Every prize, down to a $2 win, is taxable income and belongs on your return.
Why withholding is not the bill
The 24% is a deposit, not a settlement. Lottery winnings are ordinary income, and the top federal rate is 37%. On a large prize the withholding can fall well short of what is actually due, and the difference arrives with your return. People who spend the whole check are the ones caught out by this.
What your state takes
State withholding is the part this page will not invent. Rates change, several states withhold less than their own top rate, and the public tables disagree with each other by as much as two percentage points on the big states. Rather than print a number we cannot stand behind, the calculator takes yours.
The calculator applies your state rate to the whole prize and the federal rate to the proceeds, which is how most states and the IRS respectively do it. A few states differ, so treat the state line as the estimate it is.
What is settled:
- No individual income tax, so no state withholding: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Enter 0.
- California has an income tax but exempts state lottery winnings from it. Enter 0.
- Everywhere else, your rate is on your own lottery's prize-claim page, which every state page here links to. It is usually stated on the claim form itself.
Other things that catch people out
- Losing tickets are not a deduction unless you itemize, and then only up to your winnings. Most people do not itemize, so for most people the losses simply do not count.
- The prize is income in the year you claim it, not the year you bought the ticket. Claiming in January rather than December moves it into the next tax year.
- Splitting a ticket needs doing properly at claim time, with IRS Form 5754, or the whole prize lands on one person's return.
- An annuity is taxed as each payment arrives, not all at once.
This is a general estimate from published rates, not tax advice, and it does not know anything about the rest of your year. For a prize large enough to matter, talk to an accountant before you claim it.
Scratch Better is not affiliated with any state lottery and does not sell tickets. Rankings are relative, not a guaranteed edge.