The three thresholds that decide what happens at the counter
Lottery taxes follow federal lines that almost nobody can quote. Under $600, nothing is reported and nothing is withheld; the prize is still taxable income, and declaring it is on you. From $600, a prize that is also at least 300 times the ticket price is reported to the IRS on Form W-2G, but still nothing is withheld: the IRS knows about the money while none of the tax has been paid, which is the tier that surprises people in April. Once winnings pass $5,000, the lottery must withhold 24% federal on the spot (and 24% applies to any reportable prize if you cannot produce a taxpayer identification number). Reporting and withholding are two different machines, and the whole page below is about the gap between them.
Why 24% is a deposit, not the price
The 24% comes off at the claim window, but the real bill is your 2026 bracket math, and the top federal bracket is 37%. The same $50,000 prize can land three different ways: as your only income the brackets want just $3,820, so $8,180 of the $12,000 withheld comes back as a refund; on top of a $150,000 salary the bracket math is $12,000 and the withholding happens to land on the nose; on top of a very large income it costs $18,500 and April wants $6,500 more. One prize, a refund or a bill, decided entirely by the income it lands on.
A worked example: the $1 million Powerball match-five
Match all five white balls and Powerball pays $1,000,000. The lottery withholds $240,000 federal. If the prize is your only 2026 income (single), the brackets actually want $320,000.25, so another $80,000.25 is due at filing; stacked on top of a high income it runs to $370,000. In New York, the state adds $109,000 at its 10.9% top rate, and you keep about $570,999.75. The headline said one million; a New Yorker's bank account says 571 thousand.
What a $1,000,000 prize nets by state
Single filer, prize as the only 2026 income, federal tax of $320,000.25 everywhere, state at its top marginal rate (Tax Foundation, January 2026). Where you bought the ticket and where you live both matter; the special cases below the table explain the footnoted states.
| State | Top rate | State tax | Take-home |
|---|---|---|---|
| Alabama | 5.00% | $50,000.00 | $629,999.75 |
| Alaska | 0.00% | $0.00 | $679,999.75 |
| Arizona | 2.50% | $25,000.00 | $654,999.75 |
| Arkansas | 3.90% | $39,000.00 | $640,999.75 |
| California | 0.00% | $0.00 | $679,999.75 |
| Colorado | 4.40% | $44,000.00 | $635,999.75 |
| Connecticut | 6.99% | $69,900.00 | $610,099.75 |
| Delaware | 6.60% | $66,000.00 | $613,999.75 |
| District of Columbia | 10.75% | $107,500.00 | $572,499.75 |
| Florida | 0.00% | $0.00 | $679,999.75 |
| Georgia | 5.19% | $51,900.00 | $628,099.75 |
| Hawaii | 11.00% | $110,000.00 | $569,999.75 |
| Idaho | 5.30% | $53,000.00 | $626,999.75 |
| Illinois | 4.95% | $49,500.00 | $630,499.75 |
| Indiana | 2.95% | $29,500.00 | $650,499.75 |
| Iowa | 3.80% | $38,000.00 | $641,999.75 |
| Kansas | 5.58% | $55,800.00 | $624,199.75 |
| Kentucky | 3.50% | $35,000.00 | $644,999.75 |
| Louisiana | 3.00% | $30,000.00 | $649,999.75 |
| Maine | 7.15% | $71,500.00 | $608,499.75 |
| Maryland (state + county) | 8.95% | $89,500.00 | $590,499.75 |
| Massachusetts | 9.00% | $90,000.00 | $589,999.75 |
| Michigan | 4.25% | $42,500.00 | $637,499.75 |
| Minnesota | 9.85% | $98,500.00 | $581,499.75 |
| Mississippi | 4.00% | $40,000.00 | $639,999.75 |
| Missouri | 4.70% | $47,000.00 | $632,999.75 |
| Montana | 5.65% | $56,500.00 | $623,499.75 |
| Nebraska | 4.55% | $45,500.00 | $634,499.75 |
| Nevada | 0.00% | $0.00 | $679,999.75 |
| New Hampshire | 0.00% | $0.00 | $679,999.75 |
| New Jersey | 10.75% | $107,500.00 | $572,499.75 |
| New Mexico | 5.90% | $59,000.00 | $620,999.75 |
| New York | 10.90% | $109,000.00 | $570,999.75 |
| New York City (state + city) | 14.78% | $147,760.00 | $532,239.75 |
| North Carolina | 3.99% | $39,900.00 | $640,099.75 |
| North Dakota | 2.50% | $25,000.00 | $654,999.75 |
| Ohio | 2.75% | $27,500.00 | $652,499.75 |
| Oklahoma | 4.50% | $45,000.00 | $634,999.75 |
| Oregon | 9.90% | $99,000.00 | $580,999.75 |
| Pennsylvania | 3.07% | $30,700.00 | $649,299.75 |
| Rhode Island | 5.99% | $59,900.00 | $620,099.75 |
| South Carolina | 6.00% | $60,000.00 | $619,999.75 |
| South Dakota | 0.00% | $0.00 | $679,999.75 |
| Tennessee | 0.00% | $0.00 | $679,999.75 |
| Texas | 0.00% | $0.00 | $679,999.75 |
| Utah | 4.50% | $45,000.00 | $634,999.75 |
| Vermont | 8.75% | $87,500.00 | $592,499.75 |
| Virginia | 5.75% | $57,500.00 | $622,499.75 |
| Washington | 0.00% | $0.00 | $679,999.75 |
| West Virginia | 4.82% | $48,200.00 | $631,799.75 |
| Wisconsin | 7.65% | $76,500.00 | $603,499.75 |
| Wyoming | 0.00% | $0.00 | $679,999.75 |
The states with a story
California taxes lottery prizes at 0%, by statute (Gov. Code 8880.68), despite a 13.3% top income tax rate: the biggest state simply exempts its own lottery. Delaware withholds nothing at the claim window but still taxes at 6.60%, so the entire state bill arrives at filing, the sharpest version of the deposit-versus-bill trap. Washington's 9% applies only to capital gains, which a prize is not, so its real rate is zero. Maryland's 8.95% includes the average county piggyback, and New York City stacks 3.876% on the state's 10.9% for a country-leading 14.776%. Five states (Alabama, Alaska, Hawaii, Nevada, Utah) sell neither game; a resident who buys a winning ticket across the state line still owes home-state income tax on it, except in Alaska and Nevada, which have none to owe.
Powerball: where the tax lines cross the prize chart
Powerball is a $2 play with jackpot odds of 1 in 292,201,338 and base prizes of $4, $7, $100, $50,000 (four numbers plus the Powerball), $1 million (all five white balls), and the jackpot. The tax lines cross it in specific places: the $100 tiers stay paperwork-free unless the Power Play multiplier lifts them (a 10X $1,000 win gets reported; 10X is only in play when the advertised jackpot is $150 million or less). $50,000 is the first tier the withholding reaches: $12,000 comes off before the check is cut. The match-five $1 million is the worked example above, and with Power Play it is a flat $2 million, where withholding takes $480,000 against a top-bracket bill of up to $740,000. For the jackpot itself, the lump-sum or 30-year annuity decision changes the tax picture more than any rate does, and that choice has its own page: the lottery jackpot calculator.
Mega Millions: the 2025 relaunch changed the tax math too
Mega Millions relaunched in April 2025 as a $5 play with a multiplier (2X to 10X) built into every ticket, jackpot odds of 1 in 290,472,336, and jackpots that reset to $50 million. Two tax quirks fall straight out of the new design. First, because 2X is now the FLOOR, the match-five prize is never less than $2 million (base $1 million, multiplied), so every match-five winner sits deep in withholding territory. Second, the four-white-ball prize at 10X pays exactly $5,000, and withholding only applies when winnings minus the $5 ticket EXCEED $5,000: that check arrives whole, and every dollar of its tax is still owed later. The higher ticket price even moves the paperwork line: W-2G reporting wants a prize at least 300 times the wager, which on a $5 ticket means $1,500, not $600.
New for 2026: the 90% gambling loss rule
Since January 1, 2026, gambling losses are deductible only up to 90% of losses, still capped at winnings, and still only for the roughly one in seven taxpayers who itemize. A player who wins $50,000 and loses $50,000 across the year, exactly break-even, now deducts at most $45,000 and owes federal tax on $5,000 that was never actually kept. For a scratch-off habit this makes receipts matter more than ever: losing tickets only offset winnings if you can document them, and from this year even documented losses leave 10% of the winnings taxable. Congress has repeal bills pending; until one passes, this is the law your 2026 return files under.
Two housekeeping rules big wins run into
Office pools: when a group wins, one person claiming and redistributing looks to the IRS like one winner making gifts. Form 5754 exists for exactly this: file it and the lottery issues each member their own W-2G for their share, so the tax lands where the money does. Annuity winners: each yearly check is its own year's taxable income at that year's rates, which spreads the income across thirty sets of brackets; enter a single check above to see one year's picture, and see the jackpot page for whether the annuity is worth choosing in the first place.