Lottery Tax Calculator: How Much Will You Keep After Taxes?

Enter the advertised jackpot, your payout choice, filing status, and state to estimate federal and state tax on a lottery prize and what you take home.

Short answer: lottery winnings are taxed as ordinary income. The lottery withholds 24% for federal tax on prizes over $5,000, but jackpot-sized prizes are taxed mostly at the 37% top rate, so you typically owe about 13% more when you file. State tax ranges from zero (Texas, Florida, and seven other states, plus California for its own lottery) to several percent more.

This calculator is for informational purposes only. Its results are estimates, not tax advice or a guarantee of what any lottery or tax agency will withhold or assess. For the rules behind the numbers — W-2G reporting, estimated payments, gambling losses, and sharing a prize — read how lottery winnings are taxed.

How the lottery calculator works

The tool is a fast screen, not a full return. Here is what each input does:

How the math works:

• Federal tax is the extra tax the prize adds to your year: tax on (other income + prize − deductions) minus tax on (other income − deductions), using the 2026 brackets. That is the real progressive calculation, not one rate on the whole prize. The 24% withholding and the balance due at filing are shown separately.
• Annuity payments are taxed one year at a time with today's brackets and your other income; charitable gifts are applied in the first year.
• State tax uses each state's 2026 top rate as one flat percentage, which is close for jackpots because nearly all of the prize sits in the top bracket. California Lottery prizes are exempt from California tax. When you bought the ticket in another state, the tool charges that state's tax and gives your home state's credit, so you pay roughly the higher of the two rates, not both. Local taxes such as New York City's are not included.
• Which option is worth more compares the after-tax cash option invested for 29 years with every after-tax annuity payment invested at the same return until the last payment.

For the $500 million example below with a 5% return, the tool shows the lump sum slightly ahead; at 4.9% it shows the annuity ahead — the break-even sits between the two.

Lump sum vs annuity: which pays more after taxes?

The annuity pays more total dollars; the lump sum gives you less money sooner. Which is "better" depends on whether you can invest the after-tax cash at a higher return than the annuity's built-in rate.

Both national games publish the structure:

• Mega Millions pays the annuity as "one immediate payment followed by 29 annual payments," each 5% bigger than the previous one, and the cash option equals all the cash in the jackpot prize pool (Mega Millions). Tickets cost $5.
• Powerball pays the annuity as 30 graduated payments over 29 years, or a lump-sum cash value (Powerball prize chart). Tickets cost $2.

Because each payment is 5% larger than the last, the first payment is the jackpot divided by 66.44 (the sum of 1.05⁰ through 1.05²⁹). That is about 1.5% of the advertised amount; the final payment is about 4.1 times the first.

Worked example: $500 million jackpot, cash vs annuity

Assume a single filer with no other income, the 2026 brackets from Rev. Proc. 2025-32, the $16,100 standard deduction, and a published cash value of $230 million (46% of the jackpot — check the actual figure for your drawing).

Cash option, federal tax:

1. Taxable income: $230,000,000 − $16,100 = $229,983,900
2. Tax: $192,979.25 + 37% × ($229,983,900 − $640,600) = $192,979.25 + $84,857,021 = $85,050,000
3. Effective federal rate: 36.98%
4. Withheld at payout: 24% × ($230,000,000 − $2 ticket) ≈ $55,200,000
5. Still due with the return (or as estimated tax): ≈ $29,850,000
6. After federal tax: $230,000,000 − $85,050,000 = $144,950,000

Annuity, federal tax on the first payment:

1. Payment: $7,525,718; taxable income $7,509,618
2. Tax: $192,979.25 + 37% × ($7,509,618 − $640,600) = $2,734,516 (36.3%)
3. After federal tax: about $4.79 million in year one, rising to about $19.6 million in year 30

Over 30 years, federal tax on the annuity totals about $183.5 million at 2026 rates, leaving about $316.5 million — more than double the cash option's $144.95 million, but spread over three decades.

The break-even: discounting the after-tax annuity payments, the two choices are worth the same at about 4.9% a year. If you are confident you can earn more than that after tax, the lump sum comes out ahead; if not, the annuity does. The annuity's tax saving is small — about $50,000 a year from the lower brackets — so the decision is about investment return, spending discipline, and estate planning, not tax rates.

When the annuity can save real tax

For mid-size prizes the annuity can keep money out of the top bracket. A $5 million state lottery jackpot paid over 20 or 30 years produces annual payments in the 24%–35% brackets instead of one year at 37%. Check your game's rules: state lotteries set their own payout terms, and many smaller games offer only a lump sum.

Federal tax on lottery winnings: 24% withholding vs your real rate

Under the Form W-2G instructions, the lottery must withhold 24% when the winnings minus the wager exceed $5,000. It files a W-2G when winnings are at least $2,000 (the 2026 threshold, up from $600) and at least 300 times the wager. Your actual tax depends on all your income for the year:

How the $1,000,000 row works: taxable income without the prize is $80,000 − $16,100 = $63,900, taxed at $5,800 + 22% × $13,500 = $8,770. With the prize it is $1,063,900, taxed at $192,979.25 + 37% × $423,300 = $349,600. The difference, $340,830, is the tax the prize adds — 34.1% of the prize.

Winners who will owe more should pay estimated tax for the quarter of the win rather than wait for April; see quarterly estimated taxes. Nonresident aliens are not issued a W-2G; their U.S. lottery winnings are generally subject to 30% withholding unless a treaty lowers it.

State taxes on lottery winnings

Your home state taxes residents on lottery income, and the state where you bought the ticket may tax you as a nonresident. Most states with an income tax give residents a credit for tax paid to another state on the same income, so you usually pay the higher of the two rates, not both.

States that don't tax lottery winnings

California's exemption covers only its own lottery. A California resident who wins on a ticket bought in Arizona or Nevada reports it as taxable income on the California return.

State examples

Putting the federal and state numbers together for the $230 million cash prize: a Texas or California-ticket winner keeps about $144.95 million, while a Pennsylvania winner keeps about $144.95 million − $7.06 million = $137.89 million.

Cross-state tickets work the same way in the calculator. A New Jersey resident with a ticket bought in New York pays New York's 10.9% ($25.07 million) and gets a full credit against New Jersey's 10.75%, keeping about $119.88 million. A California resident who bought the ticket in Arizona pays Arizona 2.5% ($5.75 million) plus California's 13.3% minus that credit ($24.84 million), keeping about $114.36 million — California's exemption doesn't apply to another state's lottery.

Smaller prizes: scratch-offs and second-tier wins

Most real winners take home a scratch-off or a second-tier draw prize, not a jackpot:

• Under $2,000: no W-2G for 2026 payments, but the winnings are still taxable and belong on your return.
• $2,000 to $5,000: W-2G issued, no mandatory federal withholding. Budget for your own bracket — 12% or 22% for most households.
• Over $5,000 (after subtracting the ticket): 24% federal withholding. If your bracket is 22% or lower, you get part of it back when you file.

Example: a single filer earning $60,000 wins $50,000 on a $10 scratch-off. The lottery withholds 24% × $49,990 = $11,998. Without the prize, taxable income is $43,900 and tax is $1,240 + 12% × $31,500 = $5,020. With it, taxable income is $93,900 and tax is $5,800 + 22% × $43,500 = $15,370. The prize adds $10,350 of tax, so about $1,648 of the withholding comes back as a refund (assuming wage withholding covers the wage tax).

Mistakes that shrink a lottery payout

1. Treating 24% as the whole bill. On a jackpot, roughly 13 percentage points of federal tax are still unpaid after withholding.
2. Using a fixed cash percentage. The cash value changes with interest rates; plug in the published number.
3. Forgetting the purchase state. Buying a ticket while traveling can create a nonresident return in that state.
4. Assuming gambling losses wipe out the tax. Starting in 2026 you can deduct only 90% of losses, only up to winnings, and only if you itemize (Pub. 505).
5. Moving after you win. Pennsylvania and New York tax nonresidents on prizes from tickets bought there, so moving after the drawing does not remove that state's tax.

Related calculators and guides

Large prizes usually lead to gifts, charitable plans, and investments. Use the gift tax calculator before sharing money with family (the 2026 annual exclusion is $19,000 per person), the estate tax calculator to see how unpaid annuity installments count in an estate, and the federal tax bracket calculator to check the bracket math above. The 2026 inflation adjustments guide lists every bracket threshold used on this page.