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Lottery Tax Calculator: How Taxes on Winnings Work

Lottery winnings are subject to federal and sometimes state taxes. If you win big, plan for the taxes ahead of time.

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Alana Benson is an investing writer who joined NerdWallet in 2019. She covers a wide variety of investing topics including stocks, socially responsible investing, cryptocurrency, mutual funds, HSAs and financial advice. She is also a frequent contributor to NerdWallet's "Smart Money" podcast. Alana has appeared on FOX Houston and the "PennyWise" podcast and has been quoted in MarketWatch and The Sun. Before joining NerdWallet, she wrote two books on identity theft and several young adult nonfiction titles. Her work has been featured in The New York Times, The Washington Post, The Associated Press, MSN, Yahoo Finance and MarketWatch. She is based in Wyoming.

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Senior Writer

Alana Benson is an investing writer who joined NerdWallet in 2019. She covers a wide variety of investing topics including stocks, socially responsible investing, cryptocurrency, mutual funds, HSAs and financial advice. She is also a frequent contributor to NerdWallet's "Smart Money" podcast. Alana has appeared on FOX Houston and the "PennyWise" podcast and has been quoted in MarketWatch and The Sun. Before joining NerdWallet, she wrote two books on identity theft and several young adult nonfiction titles. Her work has been featured in The New York Times, The Washington Post, The Associated Press, MSN, Yahoo Finance and MarketWatch. She is based in Wyoming.

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Managing Editor

Pamela de la Fuente is a managing editor of NerdWallet's personal finance content. She leads budgeting, money-making, consumer credit and and debt coverage.

Ask her and her talented team about why credit scores matter, how to save money on your grocery bill, finding the right side hustle, how to protect your identity for free and more.

Previously, she led taxes and retirement coverage at NerdWallet.

Pamela joined NerdWallet after working at companies including Hallmark Cards, Sprint Corp. and The Kansas City Star. She has been a writer and editor for more than 20 years.

Pamela is a thought leader in content diversity, equity, inclusion and belonging, and finds ways to make every piece of content conversational and accessible to all.

She is a graduate of the Maynard Institute's Maynard 200 program, and the National Association of Black Journalists Executive Leadership Academy. She is a two-time winner of the Kansas City Association of Black Journalists' President's Award. She was also founding co-chair of NerdWallet's Nerds of Color employee resource group.

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Winning the lottery can be a life-changing affair. A sudden windfall could help you jumpstart a number of financial and personal goals, from paying off debt to upping your investing or retirement savings game.

If you're lucky enough to hit it big, celebrations are certainly in order. But don't forget to consider the fine print: The IRS and most state governments will want a piece of the action — how big of a piece depends on the size of your prize.

Here's what to know about how taxes work on lottery winnings and how to plan ahead.

» MORE: See our picks for the year's best wealth managers

Lottery tax calculator

Enter the amount won to estimate how much federal tax may be immediately withheld on your winnings.

Should I take a lump sum payment or annuity payments?

You may be able to take all the money right away or receive it in payments stretched out over many years (typically 29).

If you take the lump sum payment, you get a giant pile of cash all at once. The amount is typically much smaller than the actual jackpot, but since the money is in your hands right away, you control what to do with it — including how and where to invest the money. Do that poorly, and you may end up with less money over the long run than you could have had by taking the annuity.

If you take the annuity, your taxes are deferred until you actually get the payments. Plus, it’s harder to spend all the money at once if you’re getting payments for nearly 30 years. However, the payments may not be as big as you’d prefer and you may not live long enough to enjoy all the payments.

» MORE: How to choose a financial advisor

The more you earn, the more complex your taxes become. Learn the 10 traps to dodge.

on NerdWallet Wealth Partners' site. For informational purposes only. NerdWallet Wealth Partners does not provide tax or legal advice.

How much are taxes on lottery winnings?

Lottery winnings are taxed as ordinary income, which means that the amount of tax you pay depends on which tax bracket you're in, which tax-filing status you use, where you live and how much other income you have, as well as whether you're subject to alternative minimum tax.

Even if you win big, your entire income won't be taxed at the same rate. In the U.S., the federal tax system is progressive, which means different parts of your income are taxed at different rates.

For example, if you're a single filer whose combined lottery winnings and annual salary equal $80,000 in taxable income after deductions, in 2026, you would pay 10% on the amount up to $12,400, 12% on the amount from $12,401 to $50,400, and 22% on the rest.

If you already have a high taxable income, a large lottery win could push you into the highest tax bracket (37%) — but remember, the nature of the progressive tax system means you won't be paying that higher tax rate on everything.

The tax brackets for single filers and joint filers are below. If you use a different tax-filing status (head of household or married filing separately), check out our full list of 2026 tax brackets.

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $12,400.

10% of taxable income.

12%

$12,401 to $50,400.

$1,240 plus 12% of the amount over $12,400.

22%

$50,401 to $105,700.

$5,800 plus 22% of the amount over $50,400.

24%

$105,701 to $201,775.

$17,966 plus 24% of the amount over $105,700.

32%

$201,776 to $256,225.

$41,024 plus 32% of the amount over $201,775.

35%

$256,226 to $640,600.

$58,448 plus 35% of the amount over $256,225.

37%

$640,601 or more.

$192,979.25 plus 37% of the amount over $640,600.

Tax rate

Taxable income bracket

Taxes owed

10%

$0 to $24,800.

10% of taxable income.

12%

$24,801 to $100,800.

$2,480 plus 12% of the amount over $24,800.

22%

$100,801 to $211,400.

$11,600 plus 22% of the amount over $100,800.

24%

$211,401 to $403,550.

$35,932 plus 24% of the amount over $211,400.

32%

$403,551 to $512,450.

$82,048 plus 32% of the amount over $403,550.

35%

$512,451 to $768,700.

$116,896 plus 35% of the amount over $512,450.

37%

$768,701 or more.

$206,583.50 plus 37% of the amount over $768,700.

How much is my take-home lottery prize after taxes?

That depends on your tax bracket, filing status and where you live, as well as whether you take the lump sum or annuity, among other things.

Federal taxes

The IRS requires lottery agencies to withhold 24% on winnings over $5,000. This may cover all or just some of the actual amount of tax you may owe on the prize. For example, on a $10,000 prize, $2,400 will be immediately withheld for federal taxes, leaving you with a take-home amount of $7,600.

State and local taxes

Some states also require lottery agencies to withhold state taxes on your winnings. For example, in New York, the state gaming commission is required to withhold 10.9% of New York State taxes in addition to the federal amount

» Ready to see the whole picture? Check out NerdWallet's income tax calculator

Do I have to pay state taxes on lottery winnings?

Most states tax lottery winnings. The amount the lottery commission must withhold and how the winnings are taxed depend on your state’s tax rate(s) and rules.

Only a few states — California, Florida, Nevada, Alaska, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — do not impose a state tax on lottery winnings.

Although living in these states may allow you to shelter your winnings from state tax, federal withholding and taxes will still apply.

If you live in a state that doesn’t have a lottery (Alabama, Hawaii, Nevada and Utah) or purchased your winning ticket in a state you don’t live in, the state where you purchased your ticket may withhold state taxes on your winnings, and you’ll need to figure out how much you owe to your state at tax time.

» MORE: How to find a CPA or tax accountant near you

The more you earn, the more complex your taxes become. Learn the 10 traps to dodge.

on NerdWallet Wealth Partners' site. For informational purposes only. NerdWallet Wealth Partners does not provide tax or legal advice.

Taxes on annuity payments vs. a lump sum

If you take the lump sum, you may face a higher tax rate than if you take the annuity. For example, let's say you're a single filer who makes $80,000 at your job, and you win $1 million in the lottery. Generally, here's how your winnings might be taxed in each scenario.

Lump sum: Your taxable earnings that year would go from $80,000 to $1.08 million. This moves you from the 22% federal tax bracket to the 37% federal tax bracket.

Annuity payments: Because payments are generally spread out over 29 years and increase by 5% each year, your first payment would be around $16,000, keeping you in the 22% bracket. This allows you to spread out the tax burden over a number of years. The catch? Because annuity payments increase each year, your last payment may be about $63,000.

How do I deal with lottery taxes?

If you’ve come into a lot of money from winning the lottery, find a qualified financial advisor who can help you make the most of your winnings and help you set yourself up for long-term financial success.

⏱️What to do in the first 48 hours

Tap to see a checklist of important things to do immediately if you suddenly and unexpectedly receive $100,000 or more.

If a windfall comes your way, there are a few things to do immediately, says Ryan Sterling, a financial advisor and the CEO of NerdWallet Wealth Partners.

Hire an accountant, a lawyer and a financial advisor. “Assemble a team or ‘board of directors’ to help guide you to make sure your assets are protected, you're paying the appropriate taxes and everything is buttoned up from a legal standpoint,” he says. (Here's how to find a financial advisor and how to find a CPA.)

Take steps to protect your (and your family’s) privacy. Don't pick up or respond to any unknown calls, emails or text messages. Public notices about the windfall or even just rumors that you’ve come into some money may attract attention from a variety of people who want your money. 

Decide how you’ll claim the money. If the money is from a lottery or drawing, there will likely be some sort of claim form and you’ll need to provide identification, a Social Security card, or other items. Talk with your team about whether to claim the money in your own name or through some sort of legal entity, such as a trust or an LLC. 

Decide where to deposit the funds. Make sure to keep no more than $250,000 in the same bank, as anything over that generally is not federally insured, Sterling says. You may want to consider utilizing a number of different banks and brokerage firms to ensure you stay under the FDIC coverage limits (which apply to banks) and the SIPC coverage limits (which apply to brokerage firms). There are also accounts that do this for you by sweeping your funds into a number of different banks to increase your coverage. You then access the money through a single account.

Don't buy anything. To avoid making impulsive, excitement-fueled purchases that you’ll regret, don’t make any purchases or promises to people until the money becomes boring, Sterling says. “Commit to doing nothing for the first month or so and let the excitement die down.”

Don't make loans to friends or family. Or at least don't expect to see that money again if you do. “Give it away or don't give it away. You likely won't get paid back, which could put serious pressure on a friend or family member,” Sterling says. 

Set rules and boundaries. It’s fine to help people, but in the first 48 hours, define who gets help and why, and keep the circle as tight as possible. Your team can help field the inevitable financial requests. “We're happy to play bad cop when family members and friends come for money,” Sterling says. 

» MORE: Search here for a financial advisor who can help plan retirement