Does your state tax lottery prizes?

Winning the lottery can be a dream come true, but some fear for the state tax associated with winning.

Lottery prizes range from just a few dollars, to multi- million dollar jackpots. Claiming prizes can be easy, but some people are wary and wonder what what their state requires them to pay for their lottery prizes. Some states tax lottery prizes, while others do not. Whether or not a state taxes prizes is based on the state’s income tax. Along with taxes, some states require out-of-state winners to pay an extra tax to help fund the state they purchased their ticket in.

Federal tax is not exempt in any state, and amounts to approximately 25% of the estimated jackpot. In addition, taxes differ from each person based on their financial situation, whether or not they give to charities, any current debts, and more. The numbers given below are estimates.

Does your state tax lottery winners? Here is a simple guide to see which states tax winners, which states don’t, which states tax out-of-state winners, and how much each state taxes.

States that don’t tax prizes

Of the 43 states with established state lotteries, 9 of them do not tax lottery prizes. This means if you win the lottery in any of these states, you will not pay taxes on your lottery winnings. However, there is still a 25% federal tax on lottery prizes. States that do not tax lotteries include:

  • California
  • Delaware
  • Florida
  • New Hampshire
  • Pennsylvania
  • South Dakota
  • Tennessee
  • Texas
  • Washington

States that tax prizes

If your state does tax lottery prizes, the overall effect of the tax has little influence on the overall outcome. No matter the taxes, if you are legally legible to receive a prize, you will receive a majority of the advertised prize. Most states average at 5% tax, while some exceed that. The highest tax on lotteries sits at 8.82% in New York. States that tax lotteries include:

  • Arkansas: 7%
  • Colorado: 4%
  • Connecticut: 6.7%
  • Georgia: 6%
  • Idaho: 7.8%
  • Illinois: 5%
  • Indiana: 3.4%
  • Iowa: 5%
  • Kansas: 5%
  • Kentucky: 6%
  • Louisiana: 5%
  • Maine: 5%
  • Massachusetts: 5%
  • Michigan: 4.35%
  • Minnesota: 7.25%
  • Missouri: 4%
  • Montana: 6.9%
  • Nebraska: 5%
  • New Jersey: 3%
  • New Mexico: 6%
  • New York:  8.82%
  • North Carolina: 7%
  • North Dakota: 3.99%
  • Ohio: 4%
  • Oklahoma: 4%
  • Oregon: 8%
  • Rhode Island: 7%
  • South Carolina: 7%
  • Vermont: 6%
  • Virginia: 4%
  • Washington D.C.: 8.5%
  • West Virginia: 6.5%
  • Wisconsin: 7.75%

States that tax out of state

Some states require out-of-state winners to pay a additional tax on their winnings. This is to ensure the state still receives funds to continue offering lotteries. States that tax out-of-state-winners include:

  • Arizona. 5% tax for residents; 6% tax for non-residents
  • Maryland. 8.75% for residents; 7% for non-residents


To see what your state taxes for lottery prizes, visit their website to see how much you can expect from your winnings.

Written by LotteryHUB News Staff Writers

The LotteryHUB News team collaborated to provide this article for our readers. As always, good luck with your next bet! We’re always here to keep you on top of your game.