Lottery Tax Calculator

What is withheld is not what you owe

This is the single most important thing about lottery tax, and it catches winners every year.

When you collect a large prize in the United States, the payer withholds tax immediately. Under the withholding rules, the rate applied to winnings of 5,000 or more from sweepstakes, wagering pools, lotteries and sports wagering is a flat 24 percent.

That 24 percent is a prepayment. It is not a final tax, it is not a settlement, and it is frequently nowhere near enough.

Lottery winnings are ordinary income. They are added to everything else you earned that year and taxed at whatever marginal rates apply, and a large prize pushes almost all of itself into the top bracket. The difference between what was taken at the counter and what you actually owe becomes a bill when you file.

This calculator takes a prize amount and two rates and shows you the tax and the net. What it gives you is only as honest as the rates you feed it, so the sections below are about getting those right.

Three fields

1. Lottery Prize Amount. The gross prize before anything comes off.
2. Federal Tax Rate. A percentage.
3. State Tax Rate. A percentage.

Both taxes are calculated on the gross prize and subtracted from it:

Federal tax = prize × federal rate

State tax = prize × state rate

Net = prize - federal tax - state tax

You get back the federal tax, the state tax and the net winnings.

Note that the two rates are applied independently to the full prize rather than one after the other. That is the right treatment for most US states, since state income tax is charged on the same income the federal tax is charged on rather than on what is left after it.

The bill that arrives in April

Take a prize of 1,000,000 and follow what happens.

At the counter, 24 percent is withheld: 240,000. You walk away with 760,000 in hand, before any state tax.

Then the tax year ends and the prize is added to your income. For a sum this size the top federal bracket does most of the work.

Somewhere between eighty and a hundred and thirty thousand still to pay, on a prize where the tax was supposedly already taken.

That is the gap. It exists because 24 percent is a flat withholding rate designed to cover a wide range of winners, not a calculation of any individual's liability.

Two practical consequences.

Do not treat the amount that lands in your account as yours. Set aside the difference between the withholding and your likely marginal rate, in something you can reach, until the return is filed.

And you may owe estimated tax during the year rather than waiting. Where winnings are received without enough being withheld, the guidance is explicit that you may need to pay estimated tax, and underpaying can attract a penalty on top of the tax.

Which rate to actually type

The federal box will accept anything, and what you put in decides whether the answer is useful or comforting.

To see what will be withheld at the counter, enter 24. That is the statutory rate on lottery winnings of 5,000 or more, and it is what the payer will take.

To see what you are likely to actually owe, enter your expected effective federal rate on the year's total income. For a large prize this will be well above 24 and approaching the top bracket, since the prize itself pushes you there.

Run it both ways. The first number tells you what to expect on the day. The second tells you what to keep.

A word on the difference between marginal and effective rates, because it cuts both ways here. Your marginal rate is what applies to your last unit of income. Your effective rate is total tax divided by total income, and it is lower, because the earlier slices were taxed more gently.

For a modest prize the effective rate is what matters and it may be well below 24 percent, in which case some of the withholding comes back as a refund. For a large prize the effective rate converges on the marginal rate, because the prize dwarfs everything else you earned, and there is no meaningful gentle slice left.

One more thing the flat calculation cannot capture. If the prize is paid as an annuity rather than a lump sum, each year's payment is separate income taxed in its own year, usually at much lower rates than a single enormous payment would attract. The lottery annuity calculator handles that schedule.

A million, three ways

Same prize, three sets of assumptions.

A range of 180,000 between the withholding view and a realistic one, on the same prize.

The first row is what happens at the counter. The third is closer to what you keep. Anyone budgeting off row one is planning around a number that is 31 percent too high.

The state rate, which varies more than anything else

The federal position is broadly uniform. The state position is not, and it varies more than any other input here.

Some states levy no income tax at all, so lottery winnings attract nothing at state level. Others tax at a flat rate. Others run progressive brackets, and at the top end the rate can exceed 10 percent.

On a million, that spread is worth real money:

More than a hundred thousand between the highest and lowest, on identical winnings.

Three details worth knowing before you pick a number for the box.

Which state taxes you may not be the one you live in. Some states tax winnings sourced in that state regardless of where the winner lives, which can mean filing in two states and claiming a credit. Where you bought the ticket matters.

State withholding is separate from state tax owed. Many states withhold at a fixed rate that, like the federal one, may not match your actual liability.

Some cities levy their own income tax. There is no third box, so fold any local rate into the state figure.

Rates and rules change with each legislative session, so check the current position for your state rather than a figure you remember or one quoted in an article.

If you are not in the United States

The structure of this calculator is American, with a federal rate and a state rate, and the withholding rules described above are US rules. Treatment elsewhere differs enormously and it is worth knowing which side you are on.

Several countries do not tax lottery winnings as income at all, treating a prize as a windfall rather than earnings. In those places the headline prize is close to what you receive, though income the winnings subsequently generate is usually taxable in the ordinary way.

Others tax winnings at a flat rate deducted at source, sometimes with a threshold below which nothing is taken.

Others again treat winnings as ordinary income, as the US does.

If your country deducts a single flat rate, enter it in the federal box and leave the state box at zero. If there is a second local or regional layer, use the state box for it. The arithmetic works the same way regardless of what the fields are called.

What you should not do is assume the 24 percent figure discussed on this page applies to you. It is specific to US withholding on gambling winnings and has no relevance elsewhere.

What the calculation does not see

Your other income. The tool applies a flat rate to the prize alone. In a progressive system your other earnings determine which brackets the prize falls into, so two people winning the same amount can owe very different tax.

Deductions and credits. Nothing here accounts for anything that reduces your taxable income.

Gambling losses. In the US, losses can be deducted against winnings if you itemise, subject to limits that have changed recently. This is worth raising with a tax professional rather than estimating.

The annuity option. A prize taken over decades is taxed year by year at the rates applying in each year, which is a materially different outcome from a single lump sum.

Sharing a prize. Where a group holds a winning ticket, the split has to be documented properly, and there is a specific form for reporting winnings across multiple winners. Getting this wrong can result in one person being taxed on the whole prize.

The general point. This is a quick estimate on a flat rate. A prize large enough to matter is large enough to justify professional advice before you make any decisions with the money, and nothing here is tax advice.

Questions people ask

How much tax is withheld from lottery winnings?

In the US, a flat 24 percent on winnings of 5,000 or more from lotteries, sweepstakes and wagering pools. That is a prepayment rather than a final tax.

Is the 24 percent all I will pay?

Usually not on a large prize. Winnings are ordinary income taxed at marginal rates, so a prize that pushes you into the top bracket can leave a substantial balance due when you file. On a million at a 37 percent effective rate, that is 130,000 beyond what was withheld.

What rate should I enter?

Enter 24 to see what will be withheld at the counter. Enter your expected effective federal rate to see what you are likely to owe. Run both, and set aside the difference.

Do I need to pay tax before I file?

Possibly. Where winnings are received and not enough is withheld, estimated tax payments may be required during the year, and underpaying can attract a penalty.

How much is state tax on winnings?

It ranges from nothing to over 10 percent depending on the state, and some states tax winnings sourced there even if you live elsewhere. On a million prize the spread between the extremes is more than a hundred thousand.

Is state tax charged on what is left after federal tax?

No. Both are calculated on the gross prize, which is how the tool treats them, since state income tax is generally charged on the same income rather than on the post-federal remainder.

Does taking the annuity change the tax?

Yes, considerably. Each annual payment is income in its own year, so a schedule of smaller payments generally attracts lower rates than one enormous lump sum. The lottery annuity calculator models that schedule.

Does this work outside the United States?

The arithmetic does. The 24 percent withholding rate does not, since it is a US rule. Some countries do not tax lottery prizes at all and others deduct a flat rate at source. Enter whatever applies where you are.

References

The regular gambling withholding rate of 24 percent under Section 3402(q), applying to winnings of 5,000 or more from sweepstakes, wagering pools, lotteries and sports wagering, and the backup withholding rate of 24 percent under Section 3406 where a winner does not furnish a correct taxpayer identification number, come from the Internal Revenue Service's instructions for Forms W-2G and 5754. The treatment of that withholding as a prepayment against a final liability, the point that it applies whether winnings are paid in cash or as an annuity, and the potential requirement to pay estimated tax where withholding is insufficient, come from IRS Publication 505. The reporting of winnings across multiple winners is covered by Form 5754.

1. Internal Revenue Service, Instructions for Forms W-2G and 5754 (revised January 2026). https://www.irs.gov/instructions/iw2g
2. Internal Revenue Service, Publication 505: Tax Withholding and Estimated Tax. https://www.irs.gov/publications/p505
3. Internal Revenue Service, Topic No. 419, Gambling Income and Losses. https://www.irs.gov/taxtopics/tc419
4. Internal Revenue Service, Publication 15 (Circular E), Employer's Tax Guide. https://www.irs.gov/publications/p15