Indiana lottery taxes: 2.95% state, plus county tax
Rate checked on November 4, 2026 against the sources listed at the end of this page.
Indiana taxes lottery prizes in two layers. The state adjusted gross income tax is a flat 2.95% for 2026, according to the Department of Revenue's Departmental Notice #1. On top of that, every Indiana county levies a local income tax on its residents.
The state rate keeps stepping down: 3.00% in 2025, 2.95% in 2026, and 2.90% scheduled for 2027.
Take-home pay on a lump-sum prize in Indiana
The table applies the top federal rate of 37% plus 2.95% Indiana state tax (county tax of 0.50% to 3.00% for residents not included). Amounts are the cash (lump-sum) value you receive, not the advertised annuity jackpot.
| Cash prize | Federal (37%) | State | You keep |
|---|---|---|---|
| $1.00M | −$370,000 | −$29,500 | $600,500 |
| $10.00M | −$3.70M | −$295,000 | $6.00M |
| $100.00M | −$37.00M | −$2.95M | $60.05M |
| $500.00M | −$185.00M | −$14.75M | $300.25M |
| $1.00B | −$370.00M | −$29.50M | $600.50M |
Federal figure is the total owed at the top bracket. At claim time only 24% is withheld; the rest is due when you file. Smaller prizes can fall into lower brackets, so the real federal bill may be less.
County income tax: not included in the calculator
Indiana's 92 counties charge their own local income tax. For 2026 the rates run from 0.50% to 3.00% (for example Lake County 1.5%, Marion County 2.02% and Cass County 2.95%). Your county is the one you lived in on January 1 of the tax year. Some counties changed rates during 2026, and the Department of Revenue revised its rate list effective October 1, 2026.
County tax is not included in our calculator or in the table above. To estimate it, multiply your prize by your county's rate. A Marion County resident, for example, would add about 2.02% to the 2.95% state rate.
What is withheld when you claim
The Hoosier Lottery's winner guide (updated January 2025) says state tax is withheld on winnings over $1,200, and both federal and state tax are withheld when winnings minus the wager exceed $5,000. The guide does not give a percentage. We could not confirm whether the $1,200 threshold changed for 2026 or whether county tax is withheld at claim time, so check with the Hoosier Lottery.
Nonresidents
Indiana taxes nonresidents on Indiana lottery winnings. Department of Revenue Bulletin #39 lists nonresidents with winnings from Indiana lotteries, casinos or riverboats as required to file an Indiana return, and it excludes lottery winnings from Indiana's reciprocal agreements with other states. Old forms from 1999 and 2000 that say Hoosier Lottery prizes are untaxed are out of date.
A nonresident owes Indiana county tax only if their principal place of work or business was in an Indiana county on January 1, so most out-of-state winners pay state tax only. Their home state may tax the prize too; see ticket state vs home state and our Illinois, Michigan, Ohio and Kentucky guides.
Common questions
What is Indiana's state tax rate on lottery winnings in 2026?
2.95%, the state adjusted gross income tax rate for 2026 (Departmental Notice #1).
Do I also pay county tax on an Indiana lottery prize?
If you are an Indiana resident, yes: your county's local income tax, 0.50% to 3.00% in 2026, based on where you lived on January 1. Our calculator does not include it.
How much of a $10 million cash prize would I keep in Indiana?
About $6.01 million after 37% federal and 2.95% state tax, before county tax. In a 2.02% county, about $5.80 million.
Sources
- IRS Topic 419: Gambling income and losses
- IRS Instructions for Forms W-2G and 5754
- Indiana DOR: Departmental Notice #1, 2026 state rate 2.95% and county rates (effective October 1, 2026)
- Indiana DOR: Income Tax Bulletin #39, nonresidents with lottery winnings must file
- Hoosier Lottery: Winner Resource Guide (updated January 2025, PDF)
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