Introduction
In the United States, the taxation of lottery winnings varies from state to state. While some states impose taxes on lottery winnings, others do not. This discrepancy can significantly impact the amount of money a lottery winner ultimately receives. Understanding these variations is crucial for individuals dreaming of hitting the jackpot and planning for their financial future.
The reason behind the differing tax policies on lottery winnings stems from the autonomy granted to individual states regarding their taxation systems. Each state has the authority to determine its own tax rates and whether or not to tax lottery winnings. The decision to tax lottery winnings is often influenced by various factors, including the state’s fiscal situation, budgetary needs, and political considerations.
In total, there are 36 states that impose taxes on lottery winnings. The 36 states and their corresponding lottery tax rates are New York (8.82%), Maryland (8.75%), New Jersey (8%), Oregon (8%), Wisconsin (7.65%), Minnesota (7.25%), Arkansas (7%), South Carolina (7%), Connecticut (6.99%), Idaho (6.93%), Montana (6.90%), West Virginia (6.50%), New Hampshire (6%), New Mexico (6%), Vermont (6%), Rhode Island (5.99%), Georgia (5.75%), North Carolina (5.45%), Arizona (5%), Iowa (5%), Kansas (5%), Kentucky (5%), Louisiana (5%), Maine (5%), Massachusetts (5%), Nebraska (5%), Illinois (4.95%), Michigan (4.25%), Colorado (4%), Missouri (4%), Ohio (4%), Oklahoma (4%), Virginia (4%), Indiana (3.23%), Pennsylvania (3.07%), North Dakota (2.90%).
On the other hand, the following states do not tax lottery winnings: California, Delaware, Florida, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Taxes on Lottery Winnings
| # | State | Lottery Tax Rate |
|---|---|---|
| 1 | New York | 8.82% |
| 2 | Maryland | 8.75% |
| 3 | New Jersey | 8% |
| 4 | Oregon | 8% |
| 5 | Wisconsin | 7.65% |
| 6 | Minnesota | 7.25% |
| 7 | Arkansas | 7% |
| 8 | South Carolina | 7% |
| 9 | Connecticut | 6.99% |
| 10 | Idaho | 6.93% |
| 11 | Montana | 6.9% |
| 12 | West Virginia | 6.5% |
| 13 | New Hampshire | 6% |
| 14 | New Mexico | 6% |
| 15 | Vermont | 6% |
| 16 | Rhode Island | 5.99% |
| 17 | Georgia | 5.75% |
| 18 | North Carolina | 5.45% |
| 19 | Arizona | 5% |
| 20 | Iowa | 5% |
| 21 | Kansas | 5% |
| 22 | Kentucky | 5% |
| 23 | Louisiana | 5% |
| 24 | Maine | 5% |
| 25 | Massachusetts | 5% |
| 26 | Nebraska | 5% |
| 27 | Illinois | 4.95% |
| 28 | Michigan | 4.25% |
| 29 | Colorado | 4% |
| 30 | Missouri | 4% |
| 31 | Ohio | 4% |
| 32 | Oklahoma | 4% |
| 33 | Virginia | 4% |
| 34 | Indiana | 3.23% |
| 35 | Pennsylvania | 3.07% |
| 36 | North Dakota | 2.9% |
| 37 | California | 0% |
| 38 | Delaware | 0% |
| 39 | Florida | 0% |
| 40 | South Dakota | 0% |
| 41 | Tennessee | 0% |
| 42 | Texas | 0% |
| 43 | Washington | 0% |
| 44 | Wyoming | 0% |
Taxes on Lottery Winnings by State
Arizona
Lottery Tax Rate
5%
Ranked in the US
#19
Arizona imposes a tax rate of 5% on lottery winnings. When individuals win the lottery in Arizona, they must allocate a portion of their winnings to fulfill their tax obligations.
Arkansas
Lottery Tax Rate
7%
Ranked in the US
#7
Arkansas taxes lottery winnings at a rate of 7%.
California
Lottery Tax Rate
0%
Ranked in the US
#37
California does not tax lottery winnings. If individuals win the lottery in California, they are not required to pay state taxes on their winnings. However, it's important to note that lottery winnings are still subject to federal income taxes.
Colorado
Lottery Tax Rate
4%
Ranked in the US
#29
Colorado imposes a tax rate of 4% on lottery winnings. When individuals win the lottery in Colorado, they are required to pay taxes on their winnings.
Connecticut
Lottery Tax Rate
6.99%
Ranked in the US
#9
Connecticut imposes a tax rate of 6.99% on lottery winnings. Whether it's a multimillion-dollar jackpot or a smaller prize, individuals who win the lottery in Connecticut need to account for the state tax.
Delaware
Lottery Tax Rate
0%
Ranked in the US
#38
Similar to California, Delaware does not impose state taxes on lottery winnings. Individuals who win the lottery in Delaware do not have to pay state taxes on their winnings. However, they may still be liable for federal income taxes on their lottery prizes.
Florida
Lottery Tax Rate
0%
Ranked in the US
#39
Florida is another state that does not tax lottery winnings. Individuals who win the lottery in Florida are not required to pay state taxes on their winnings. However, federal income taxes may still apply to lottery prizes.
Georgia
Lottery Tax Rate
5.75%
Ranked in the US
#17
Lottery winners in Georgia face a tax rate of 5.75% on their winnings. When Lady Luck smiles upon individuals in Georgia, they should be prepared to allocate a portion of their winnings to cover their tax liability.
Idaho
Lottery Tax Rate
6.93%
Ranked in the US
#10
Idaho taxes lottery winnings at a rate of 6.93%.
Illinois
Lottery Tax Rate
4.95%
Ranked in the US
#27
In Illinois, lottery winnings are subject to a tax rate of 4.95%. Whether it's a significant jackpot or a smaller prize, individuals who win the lottery in Illinois need to account for the state tax.
Indiana
Lottery Tax Rate
3.23%
Ranked in the US
#34
Indiana taxes lottery winnings at a rate of 3.23%.
Iowa
Lottery Tax Rate
5%
Ranked in the US
#20
Iowa taxes lottery winnings at a rate of 5%.
Kansas
Lottery Tax Rate
5%
Ranked in the US
#21
In Kansas, lottery winnings are subject to a tax rate of 5%. When individuals win the lottery in Kansas, they must allocate a portion of their winnings to fulfill their tax obligations.
Kentucky
Lottery Tax Rate
5%
Ranked in the US
#22
Kentucky imposes a tax rate of 5% on lottery winnings.
Louisiana
Lottery Tax Rate
5%
Ranked in the US
#23
In Louisiana, lottery winnings are subject to a tax rate of 5%. When individuals win the lottery in Louisiana, they must set aside a portion of their winnings to fulfill their tax obligations.
Maine
Lottery Tax Rate
5%
Ranked in the US
#24
Lottery winners in Maine face a tax rate of 5% on their winnings.
Maryland
Lottery Tax Rate
8.75%
Ranked in the US
#2
In Maryland, lottery winnings are subject to taxation at a rate of 8.75%. This means that individuals who strike it lucky in the lottery will need to set aside a portion of their winnings to fulfill their tax obligations to the state.
Massachusetts
Lottery Tax Rate
5%
Ranked in the US
#25
Massachusetts taxes lottery winnings at a rate of 5%. When individuals win the lottery in Massachusetts, they are required to allocate a portion of their winnings to fulfill their tax responsibilities.
Michigan
Lottery Tax Rate
4.25%
Ranked in the US
#28
Michigan taxes lottery winnings at a rate of 4.25%.
Minnesota
Lottery Tax Rate
7.25%
Ranked in the US
#6
Lottery winners in Minnesota face a tax rate of 7.25% on their winnings.
Missouri
Lottery Tax Rate
4%
Ranked in the US
#30
Lottery winners in Missouri face a tax rate of 4% on their winnings. When individuals win the lottery in Missouri, they must set aside a portion of their winnings to fulfill their tax obligations.
Montana
Lottery Tax Rate
6.9%
Ranked in the US
#11
In Montana, lottery winnings are subject to a tax rate of 6.90%.
Nebraska
Lottery Tax Rate
5%
Ranked in the US
#26
Nebraska imposes a tax rate of 5% on lottery winnings. When individuals win the lottery in Nebraska, they must set aside a portion of their winnings to fulfill their tax obligations.
New Hampshire
Lottery Tax Rate
6%
Ranked in the US
#13
New Hampshire taxes lottery winnings at a rate of 6%. This tax rate applies to both residents and non-residents who win prizes in the state's lottery.
New Jersey
Lottery Tax Rate
8%
Ranked in the US
#3
New Jersey is another state that taxes lottery winnings. With a tax rate of 8%, lottery winners in the state must factor in this tax obligation when calculating their net winnings.
New Mexico
Lottery Tax Rate
6%
Ranked in the US
#14
Lottery winnings in New Mexico are subject to a tax rate of 6%.
New York
Lottery Tax Rate
8.82%
Ranked in the US
#1
New York is among the states that impose a tax on lottery winnings. Lottery winners in New York are subject to a tax rate of 8.82%.
North Carolina
Lottery Tax Rate
5.45%
Ranked in the US
#18
In North Carolina, lottery winnings are subject to a 5.45% tax rate. Whether it's a significant jackpot or a smaller prize, individuals who win the lottery in North Carolina need to account for the state tax.
North Dakota
Lottery Tax Rate
2.9%
Ranked in the US
#36
North Dakota taxes lottery winnings at a rate of 2.90%.
Ohio
Lottery Tax Rate
4%
Ranked in the US
#31
In Ohio, lottery winnings are subject to a tax rate of 4%. When individuals win the lottery in Ohio, they must allocate a portion of their winnings to fulfill their tax obligations.
Oklahoma
Lottery Tax Rate
4%
Ranked in the US
#32
Oklahoma imposes a tax rate of 4% on lottery winnings.
Oregon
Lottery Tax Rate
8%
Ranked in the US
#4
Lottery winners in Oregon are subject to an 8% tax on their winnings. This tax rate applies to all forms of lottery prizes, including jackpots and smaller cash prizes.
Pennsylvania
Lottery Tax Rate
3.07%
Ranked in the US
#35
Pennsylvania imposes a tax rate of 3.07% on lottery winnings.
Rhode Island
Lottery Tax Rate
5.99%
Ranked in the US
#16
Rhode Island taxes lottery winnings at a rate of 5.99%. When individuals win the lottery in Rhode Island, they are required to pay taxes on their winnings.
South Carolina
Lottery Tax Rate
7%
Ranked in the US
#8
In South Carolina, lottery winnings are subject to a 7% tax rate. This tax applies to prizes won in state lotteries, including both scratch-off tickets and number drawings.
South Dakota
Lottery Tax Rate
0%
Ranked in the US
#40
Lottery winnings in South Dakota are not subject to state taxes. Individuals who strike it lucky in the lottery in South Dakota do not have to pay state taxes on their winnings. It's important to note that federal income taxes may still apply to lottery prizes.
Tennessee
Lottery Tax Rate
0%
Ranked in the US
#41
Tennessee does not tax lottery winnings. Individuals who win the lottery in Tennessee are not required to pay state taxes on their winnings. However, they should be aware that federal income taxes may still apply to their lottery prizes.
Texas
Lottery Tax Rate
0%
Ranked in the US
#42
Texas is another state that does not tax lottery winnings. If individuals win the lottery in Texas, they do not have to pay state taxes on their winnings. However, federal income taxes may still apply to lottery prizes.
Vermont
Lottery Tax Rate
6%
Ranked in the US
#15
Vermont imposes a tax rate of 6% on lottery winnings. When individuals win the lottery in Vermont, they must factor in this tax rate and allocate a portion of their winnings to fulfill their tax obligations.
Virginia
Lottery Tax Rate
4%
Ranked in the US
#33
In Virginia, lottery winnings are subject to a tax rate of 4%.
Washington
Lottery Tax Rate
0%
Ranked in the US
#43
Washington does not impose state taxes on lottery winnings. When individuals win the lottery in Washington, they are not required to pay state taxes on their winnings. Nonetheless, it's important to consider federal income taxes that may apply to lottery prizes.
West Virginia
Lottery Tax Rate
6.5%
Ranked in the US
#12
West Virginia imposes a tax rate of 6.50% on lottery winnings. When individuals win the lottery in West Virginia, they are required to allocate a portion of their winnings to fulfill their tax responsibilities.
Wisconsin
Lottery Tax Rate
7.65%
Ranked in the US
#5
Wisconsin imposes a tax rate of 7.65% on lottery winnings. This tax applies to both residents and non-residents who win prizes in the state's lottery.
Wyoming
Lottery Tax Rate
0%
Ranked in the US
#44
Lottery winnings in Wyoming are not subject to state taxes. Individuals who win the lottery in Wyoming do not have to pay state taxes on their winnings. However, it's crucial to be aware of federal income tax obligations that may still apply to lottery prizes.
FAQs
How much are lottery winnings taxed ?
Lottery winnings are subject to federal income tax at a rate of 24%, and some states may also impose their own tax on lottery winnings, ranging from 0% to 8.82%.
What states tax lottery winnings ?
The states that tax lottery winnings are New York, Maryland, New Jersey, Oregon, Wisconsin, Minnesota, Arkansas, South Carolina, Connecticut, Idaho, Montana, West Virginia, New Hampshire, New Mexico, Vermont, Rhode Island, Georgia, North Carolina, Arizona, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Nebraska, Illinois, Michigan, Colorado, Missouri, Ohio, Oklahoma, Virginia, Indiana, Pennsylvania, North Dakota.
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