Lottery Tax Calculator

See what you'd actually take home after federal and state taxes. Enter a jackpot amount, pick your state, and choose lump sum or annuity.

Updated March 2026. Federal rate: 37% top bracket. State rates are top marginal rates for jackpot-level income.

Your Jackpot Details
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Payout Option
Your Take-Home
$—
Advertised Jackpot
$—
Payout Before Tax
$—
Tax Breakdown
Federal Tax (37%) -$—
State Tax (—%) -$—
Total Taxes -$—
Effective Tax Rate —%

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How Lottery Taxes Work

When you win a lottery jackpot, the IRS treats your winnings as ordinary income. That means you'll pay federal income tax at the top marginal rate of 37% on any amount over $609,350 (2025 brackets). For most jackpot winners, effectively all of the prize is taxed at 37%.

Lump Sum vs Annuity

The lump sum (cash option) is typically 45-55% of the advertised jackpot amount. You get it all at once but pay taxes on the full amount immediately. The annuity pays the full advertised jackpot over 30 annual payments that increase 5% each year. You pay taxes on each payment as you receive it, which can result in a lower effective tax rate if brackets change.

State Taxes Vary Widely

Nine states have no income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. California exempts lottery winnings from state tax. On the other end, New York state taxes lottery winnings at 10.9% — and if you live in New York City, the city adds another 3.876% on top.

Important Disclaimers

This calculator provides estimates for informational purposes only. Actual tax liability depends on your total income, filing status, deductions, and current tax law. The cash value percentage (48.5%) is an approximation — actual cash values are set by lottery commissions and vary by jackpot. Consult a tax professional for advice specific to your situation.

Tax Calculator FAQ

How much federal tax do you pay on lottery winnings?
The IRS withholds 24% immediately on prizes over $5,000. However, the actual top federal tax rate is 37%, so you'll owe the remaining 13% when you file your tax return. For a $500M jackpot, the difference between withholding and actual liability can be tens of millions of dollars.
Which states don't tax lottery winnings?
Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. California also exempts lottery winnings from state tax, making it effectively a 0% state for lottery purposes. Three additional states (Alabama, Hawaii, Utah) have no state lottery at all.
Is the lump sum or annuity better?
It depends. The annuity pays more total money (~double the lump sum) and spreads tax payments over 30 years. The lump sum gives you immediate access and lets you invest, but you pay all taxes upfront. Historically, about 90% of winners choose the lump sum. Financial advisors generally recommend the annuity unless you have a disciplined investment plan.
Do you pay taxes on lottery winnings under $600?
Technically yes — all gambling winnings are taxable income. But the lottery commission doesn't report prizes under $600 to the IRS, and no withholding occurs. You're still legally required to report it on your tax return, but there's no automatic reporting mechanism for small prizes.
Can you reduce taxes on lottery winnings?
There's no way to avoid federal taxes, but you can reduce the impact. Choosing the annuity spreads payments (and taxes) over 30 years. Charitable donations can offset some income. If you win in a state with no income tax (like Florida or Texas), you avoid state taxes entirely. Some winners establish trusts or LLCs, but consult a tax attorney before doing so.