Lottery taxes by state, explained
Two people who win the same jackpot on the same night can take home very different amounts. Federal tax is identical for both of them; the difference is the state, and sometimes the city, they live in. Here is how state lottery taxes work, and how to find your own number.
Three kinds of states
States that do not tax lottery winnings
Eight states with a lottery do not tax lottery prizes: California (California Lottery prizes only), Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Most of them have no personal income tax at all. California is the exception: it taxes most income but exempts its own lottery's prizes.
States with no lottery
Alabama, Alaska, Hawaii, Nevada and Utah do not run a state lottery. Alaska and Nevada also have no personal income tax, so their residents who win with a ticket bought elsewhere owe no home-state tax. Residents of Alabama, Hawaii and Utah who win with an out-of-state ticket can still owe their home state's income tax.
States that tax lottery winnings
Everywhere else, lottery prizes are taxed as income at the state's normal rates. For a jackpot, that means the state's top rate. New York has the highest combined burden: up to 10.9% state tax plus 3.876% for New York City residents.
Where you live vs where you bought the ticket
Your home state taxes its residents on all their income, wherever it comes from. The state that sold the winning ticket may also tax a nonresident winner on that prize. When both apply, your home state usually gives you a credit for the tax you paid the other state. The net effect is that you pay roughly the higher of the two rates.
A few examples:
- A Nevada resident wins with a California ticket: California does not tax it and Nevada has no income tax, so only federal tax applies.
- A New Jersey resident wins with a New York ticket: New York taxes it as a nonresident prize, and New Jersey taxes the resident with a credit for New York tax.
- A California resident wins with an Arizona ticket: the California exemption does not cover other states' lotteries, so California taxes it.
Local taxes
A handful of cities and counties tax income too. For lottery winners the big ones are New York City (top rate 3.876%) and Yonkers (a surcharge on state tax). Some other local income taxes may apply depending on where you live. Our calculator includes New York City.
Withholding vs what you owe
Many states withhold tax when you claim a large prize, but the amount withheld is not always the final bill. As with federal tax, you may owe more or get some back when you file your state return.
How we keep state rates accurate
Tax rates change. We check each state's current rules against its department of revenue before publishing a state guide, and we show the date each page was updated. Where a state is still being checked, our calculator shows federal tax only and says so, rather than guessing. You can see the status of every state on our state list and read how we work on the methodology page.
Does moving after winning help?
Possibly, but not as much as people think. A lump sum is taxed by the state where you lived when you won. With an annuity, your old state may continue to tax payments from a prize won while you lived there. Moving purely for taxes is a decision to make with a tax professional, not on your own.
This guide is general information, not tax advice.