Bought the ticket in another state? How lottery tax works across state lines

By Nazadev · Updated 2026-11-03 · 7 min read

Millions of people buy lottery tickets across a state line: New Yorkers in New Jersey, Californians in Arizona, Massachusetts residents in New Hampshire. If one of those tickets wins, two states can have a claim on the prize. This guide explains how the two claims fit together, with rules taken from state revenue departments.

The general pattern: the state that sold the ticket may tax the prize as income earned there, and may withhold tax when you claim. Your home state taxes you on all your income, wherever it comes from. When both tax the same prize, your home state usually gives a credit for the tax paid to the other state, so you end up paying about the higher of the two rates, not both in full.

Step 1: the state that sold the ticket

Many states treat a prize from their own lottery as income earned in that state, even when the winner lives elsewhere. Some examples from the states' own guidance:

Pennsylvania says cash prizes from the Pennsylvania Lottery are Pennsylvania-source income for nonresidents, and this includes Powerball and Mega Millions prizes on tickets bought through a Pennsylvania-licensed retailer.
Massachusetts says nonresidents are taxed on Massachusetts-source lottery winnings, and multi-state lottery tickets count as Massachusetts-source if they were bought in Massachusetts.
New Jersey taxes New Jersey Lottery prizes over $10,000, and says this standard applies to residents and nonresidents alike.
Virginia's withholding rule says withholding is required for all nonresident lottery winners.
Illinois tells the lottery to withhold Illinois income tax from both residents and nonresidents on payments of $1,000 or more.
Georgia's rule on withholding from Georgia Lottery prizes over $5,000 covers residents and nonresidents.

On the other side, some states do not tax the prize at all, whoever wins it. California does not tax California Lottery prizes, including Powerball and Mega Millions bought there. States with no income tax, such as Texas and Florida, have nothing to collect.

Step 2: the state where you live

Your home state generally taxes its residents on all their income, including a prize won in another state. A few examples:

New Jersey: out-of-state lottery winnings are taxable for New Jersey residents regardless of the amount, even though New Jersey's own prizes of $10,000 or less are exempt.
Pennsylvania: residents are taxed on lottery winnings from every source; prizes from other states' lotteries are taxable for residents.
Massachusetts: residents must include winnings from the Massachusetts lottery and from other lotteries.
California: the state's exemption names the California Lottery. California taxes most other income, so a Californian who wins with a ticket from another state should expect California tax on it.

If you live in a state with no income tax, step 2 adds nothing: only the ticket state's tax, if any, applies.

Step 3: the credit that prevents most double tax

States that tax residents on income from elsewhere usually offer a credit for income tax paid to another state on the same income. New York's version, for example, is the resident credit on Form IT-112-R, for income "sourced to and taxed by another state". The credit is limited: it cannot reduce your home-state tax below what you would owe without that income. So:

If the ticket state's rate is lower than your home state's, you pay the ticket state, then pay your home state the difference.
If the ticket state's rate is higher, your home-state tax on the prize is wiped out by the credit, but you do not get the extra back. You have paid the higher rate.

Rules on the credit vary from state to state, and some local taxes are not covered. A tax professional should run the numbers before you file.

Worked examples

These use top rates for a large prize and ignore deductions. They show the logic, not your exact bill.

You live in	Ticket bought in	What happens
Nevada	California	California does not tax its lottery prizes; Nevada has no income tax. Federal tax only.
California	Arizona	California's exemption does not cover other states' lotteries, so California taxes the prize. Arizona may also tax it; California's credit rules then apply.
Pennsylvania	New Jersey	New Jersey taxes the prize (over $10,000) as a nonresident prize, at up to 10.75% for income over $1 million. Pennsylvania taxes residents on other states' lottery prizes at 3.07%. Ask a tax professional how Pennsylvania's credit for tax paid to another state applies; with New Jersey's higher rate, the credit may cover the Pennsylvania tax.
Texas	Pennsylvania	Pennsylvania taxes the prize at 3.07% as Pennsylvania-source income. Texas has no income tax.
Florida	Georgia	Georgia withholds state tax on prizes over $5,000 for nonresidents too. Florida has no income tax.

Withholding is not the final answer

When you claim in the ticket state, that state's lottery may withhold its tax on the spot, and the IRS withholding of 24% applies everywhere on prizes over $5,000. You then file a nonresident return in the ticket state (to settle the real tax there) and a resident return at home (to report the prize and claim the credit). Expect two state returns for the year you win.

What about states with no lottery?

Alabama, Alaska, Hawaii, Nevada and Utah do not sell lottery tickets, so their residents always win with a ticket from somewhere else. Alaska and Nevada have no income tax, so only the ticket state matters. Residents of the other three should expect their home state to treat the prize like other income; check with their revenue department.

How our calculator handles this

The calculator uses the state where you live, which is the right starting point for most readers, because home-state tax plus the credit usually lands you at the higher of the two rates. If you bought the ticket in a state with a higher rate than yours, try the calculator with that state too: the larger of the two results is closer to your real bill. State-by-state details are in our state guides and the every-state table.

Common questions

Can I avoid my home-state tax by buying in a no-tax state?

Generally no. Your home state taxes residents on income from everywhere. Buying in a state that does not tax its prizes only removes the ticket state's share.

Does moving after I win change anything?

For a lump sum, the prize is generally income of the year you received it, taxed by the state where you lived then. For an annuity, rules on later payments vary; ask a tax professional before you move.

Do city taxes follow the same rules?

Not always. New York City tax, for example, applies to city residents and not to nonresidents. Local credits are often more limited than state credits.

Sources

Checked in November 2026. This guide is general information, not tax advice. Rules differ by state and change over time.