Iowa lottery taxes: a flat 3.8%
Rate checked on November 5, 2026 against the sources listed at the end of this page.
Iowa moved to a single flat income tax rate of 3.8% for tax years beginning on or after January 1, 2025 (Iowa Code section 422.5). Nothing changed for 2026. A lottery prize is ordinary income, so the state share of a jackpot is simply 3.8%.
Take-home pay on a lump-sum prize in Iowa
The table applies the top federal rate of 37% plus 3.8% Iowa tax. 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 | −$38,000 | $592,000 |
| $10.00M | −$3.70M | −$380,000 | $5.92M |
| $100.00M | −$37.00M | −$3.80M | $59.20M |
| $500.00M | −$185.00M | −$19.00M | $296.00M |
| $1.00B | −$370.00M | −$38.00M | $592.00M |
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.
Withholding over $600
The Iowa Lottery says that by law, lottery prizes of more than $600 won in Iowa are subject to a 3.8% state withholding tax. Federal tax (24%) is added on prizes over $5,000. Because the rate is flat, the 3.8% withheld is normally close to the full Iowa tax on a big prize.
You may still find an Iowa administrative rule (IAC 701, chapter 307) that says 5% is withheld from lottery prizes. That text predates the flat tax; the Iowa Lottery and the Department of Revenue both state 3.8%.
Nonresidents pay Iowa tax
The Department of Revenue is direct: gambling winnings are fully taxable in Iowa even if the winner is not an Iowa resident, and nonresidents are not exempt from Iowa withholding. A nonresident must file an Iowa return if Iowa-source income is $1,000 or more and total gross income is over $9,000 (single) or $13,500 (married filing jointly). Neighbors who buy in Iowa should also read our Minnesota, Wisconsin, Illinois, Missouri and South Dakota guides.
Local taxes: check the school district surtax
Iowa cities and counties do not levy an income tax. Some Iowa school districts add a surtax calculated as a percentage of state tax for their residents. We have not confirmed how it applies to a lottery prize, so check the current IA 1040 instructions or ask the Department of Revenue. It is not included in our calculator.
Common questions
What is Iowa's tax rate on lottery winnings in 2026?
3.8%, Iowa's flat individual income tax rate (Iowa Code 422.5).
When does the Iowa Lottery withhold state tax?
On prizes over $600, at 3.8%, for residents and nonresidents.
How much of a $10 million cash prize would I keep in Iowa?
About $5.92 million after 37% federal and 3.8% state tax.
Sources
- IRS Topic 419: Gambling income and losses
- IRS Instructions for Forms W-2G and 5754
- Iowa Code 2026, section 422.5: individual income tax rate of 3.8% (PDF)
- Iowa Department of Revenue: Iowa tax on gambling winnings (3.8%, nonresidents)
- Iowa Lottery: Know before you play (3.8% withheld over $600)
Calculate for Iowa: Powerball · Mega Millions · any prize amount