Lottery Tax Calculator
Estimate take-home after federal and state taxes on a lottery jackpot, for either lump-sum cash or 30-year annuity payout. US tax approximation only.
Last updated: September 2026
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About this calculator
Lottery winnings are taxed as ordinary income at the federal top marginal rate (37% for 2024/2025 on income above ~$609K single / $731K joint) plus state income tax. The federal withholding rate at the time of prize payment is 24% for winnings over $5 000, but this is only prepayment — the difference between 24% withholding and the 37% actual liability is due at year-end filing.
Jackpot payout choices: (1) Lump sum (cash) — you receive the current cash value of the annuity, typically 50–60% of the advertised annuity amount, discounted at Treasury rates. (2) 30-year annuity — 30 graduated annual payments totaling the advertised jackpot. Cash pays less headline but you invest the balance yourself; annuity is safer but locks in the current rate environment for 30 years.
State tax varies dramatically: no state income tax in FL, TX, TN, WA, WY, SD, NV, AK, NH (partial). California and New Hampshire don't tax lottery winnings specifically (though CA still taxes most other income). California charges 0% on lottery, 13.3% on other income — the anomaly is why big winners often show up as California residents.
Estate planning matters too. If you take the annuity and die mid-stream, the remaining payments may still be taxable to your estate. Most winners take the cash and manage their own long-term plan.
How to use
Example — $200M advertised, cash option at 50%, federal 37%, state 5%. Gross cash = $100M. Tax = 100M × 0.42 = $42M. Take-home = $58M. Example — $200M annuity, same rates. Gross (over 30 years) = $200M. Total tax if held constant = $84M. Take-home lifetime = $116M. Sounds like more, but $116M spread over 30 years is worth less in present value than $58M today at any reasonable discount rate — do a present-value comparison before choosing.
Frequently asked questions
What is the federal withholding on lottery winnings?
The federal government withholds 24% at the time of prize payment for any winnings over $5 000. But this is only prepayment — jackpot winnings push you into the top 37% marginal bracket, so you owe the additional 13% at year-end filing. Plan cash flow accordingly.
Should I take the cash or the annuity?
Financial math usually favors cash — you can invest the balance yourself, and the annuity's implicit rate is often below what a well-diversified portfolio earns. But annuity is safer against overspending or lifestyle inflation, and the winnings are protected in some states from creditors and lawsuits. Most jackpot winners choose cash.
Are lottery winnings taxed differently in different states?
Yes. Nine states have no state income tax. California and Delaware don't tax lottery specifically (though other income yes). New York City residents pay federal + state + city, totaling 51.9% marginal at jackpot levels. Consider domicile at time of ticket purchase — it's determined by residence, not the state where the ticket was bought.
Can I gift or donate to reduce the tax?
Gifts to individuals count against your lifetime exclusion ($13.6M in 2024, $27.2M for couples) — beyond that they're taxed. Charitable donations reduce your taxable winnings and can be significant if you donate substantially. Some winners set up donor-advised funds or private foundations. Consult a tax attorney; a jackpot needs professional planning.