Lottery Tax Calculator (2026)

Lottery winnings are ordinary income. A jackpot is taxed mostly at the top federal rate of 37%, plus state tax of up to about 11% depending on the state. On a $46 million cash prize, federal tax is about $17 million.

Lotteries withhold 24% federal tax on prizes over $5,000 (and many states withhold their own tax). For large prizes that is not enough: the rest is due when you file.

The lump sum gives you control and investment growth now; the annuity spreads the tax over 30 years and protects you from spending too fast. The annuity pays more in total, but the lump sum can grow if invested well.

For Powerball and Mega Millions, the advertised jackpot is paid as one payment now and 29 yearly payments, each 5% larger than the last. The cash option is the money the lottery has to fund those payments, often 45% to 50% of the jackpot.

States with no income tax on wages or winnings, such as Florida, Texas, Tennessee, Washington, South Dakota, Wyoming and New Hampshire, and California, which exempts its own state lottery prizes. Some cities, like New York City, add their own tax.

Yes. All winnings are taxable income, even when no tax is withheld or no form is issued. Report them on your return.

Only if you itemize, and from 2026 only 90% of losses count, up to your winnings. Ticket costs are gambling losses.

Each winner reports their share. Use Form 5754 at claim time so the lottery issues a W-2G to each person; otherwise one person may be taxed on the whole prize.

Gifts up to $19,000 per person a year are not reported; larger gifts use your $15 million lifetime exemption. See the Gift Tax Calculator.

It uses the flat rate you enter. Most states with a progressive tax reach their top rate on large prizes, so use your state's top rate for a jackpot.