Lottery Taxes by State: What Winners Actually Take Home

You won $100 million. What do you actually get?

The sign says $100 million. The first thing that shrinks it is not a tax: that number is an annuity, paid as 30 graduated payments over 29 years, and the cash option is what the lottery must set aside today to fund it.

The discount is bigger than most players expect. In early October 2026, Powerball advertised $467 million with a cash value of $192.4 million (41%), and Mega Millions $345 million with a cash value of $139.6 million (40%). On a $100 million jackpot, the lump sum starts at about $41 million.

Then the tax arrives. In a state with no income tax, that $41 million leaves you about $25.9 million. In New York City, about $20 million. Same ticket, same drawing, same federal rules — the difference is state and city tax.

The 24% withholding is only the first payment

Claim a prize whose proceeds (the prize minus the ticket price) exceed $5,000 and the lottery must withhold 24% for the IRS. That is not a tax rate; it is a prepayment.

The real federal rate is the top marginal rate: 37% in 2026, starting at $640,600 of taxable income for a single filer ($768,700 married). A jackpot sits entirely inside that bracket.

On the $41 million cash option, 24% is $9.84 million withheld at the counter and the real federal bill is about $15.12 million. The $5.28 million gap is due the following April — the most common way new winners get into trouble.

One small mercy: the first $640,600 is taxed at 10% to 35% instead of 37%, saving about $44,000 — a tenth of a percent of the prize. Beyond that, flat 37% is accurate enough.

Two more details. Gambling losses are deductible only if you itemize and only up to what you won (from 2026, capped at 90% of losses), so losing tickets will not dent a jackpot bill. And because 24% will not cover the tax, the IRS expects the rest in estimated payments; Publication 505 is its reference.

Three ways states tax lottery winnings

Once the federal government takes its share, your state gets a turn. States fall into three groups, and knowing yours matters more than any number-chasing strategy.

• No personal income tax. If a state does not tax income, it does not tax a jackpot.
• Exempt by statute. California taxes income but not California Lottery prizes.
• Everything else: ordinary income. Most states withhold a lottery-specific percentage at claim and settle the difference when you file.

That distinction is where most lottery-tax articles mislead: what is withheld is not what you owe. New York taxes a large prize at up to 10.9%, and a city resident owes the city on top. What reaches your bank account is the second number.

The states that take nothing

Two different rules can produce a zero. A state can have no personal income tax, or it can exempt lottery prizes from a tax it otherwise collects.

• No personal income tax. Florida, South Dakota, Tennessee, Texas and Washington do not tax personal income, so a prize is not state income. Washington comes with a 2028 twist: a new 9.9% income tax applies to income above $1 million starting 1 January 2028, which matters enormously if you choose the annuity.
• Exempt by statute. California taxes income but not prizes from the California Lottery, which includes the Powerball and Mega Millions tickets sold in the state.

Two cautions. The exemption belongs to the lottery, not to you: a California resident who wins another state's lottery prize can owe California tax on it. And a no-tax state only helps if you genuinely live there.

The states that take the most

At the other end, the state share of a $41 million cash option passes $4 million — and in New York City, $6 million. These are the rules to know before you claim.

• New York. The state tax reaches 10.9% once taxable income passes $25 million. New York City residents add up to 3.876%, and Yonkers residents pay a surcharge equal to 16.75% of their state tax.
• Massachusetts. A flat 5% plus a 4% surtax on income above $1,107,750 for the 2026 tax year — a 9% state rate on a jackpot.
• Maryland. 9.5% is withheld from a resident winner's prize; the non-resident rate is 8.75%.
• Minnesota. 7.25% is withheld at claim, but the state's top bracket is 9.85%, so the difference is owed in April.
• Oregon. 8% is withheld on any prize of $1,500 or more.
• New Jersey. Withholding is 5% on prizes from $10,001 to $500,000 and 8% above $500,000.

The pattern is the point: what is withheld at the counter is frequently not what you owe. Minnesota withholds 7.25% and taxes up to 9.85%; New York withholds a rate it calculates and taxes up to 10.9%, plus city tax for city residents. Plan for the second number.

Several other states, including Georgia and Arkansas, apply their own lottery taxes. We are verifying the exact rates against official state codes before adding them to this guide.

State by state: what a jackpot pays

The table covers the states a U.S. player is most likely to live in or buy a ticket in, with the rate withheld at claim and the rate at filing. Rates are for 2026 unless noted; every figure links to its source.

Two reading notes. "Withheld" is a prepayment: where the columns differ, the difference is due with your return. And a state can tax you even if you do not live there — see the residency section.

Lump sum or annuity: two discounts, not one

The annuity is the advertised number: one payment now and 29 more, each 5% larger. The cash option is what the lottery must set aside today to fund that stream — which is why a $100 million jackpot pays about $41 million in cash.

Choosing the annuity does not lower your tax rate: every payment is far above the top federal bracket, so 37% applies to each, and the 24% withholding — and the April shortfall — repeats every year. The annuity buys deferral, not a discount.

It does change one thing: state tax is paid year by year, based on where you live when each payment arrives. Thirty years is a long time; a move to Florida in year five changes the tax on the remaining 25 payments.

The cash option does the opposite: it taxes everything in one year and hands you control. The trade-off is not the rate but time value, flexibility and three decades of change. There is no universally right answer, which is why a CPA belongs in the room.

The tax cliff: moving before you claim

The most repeated piece of lottery advice is the most misunderstood: move to a no-tax state before you claim and the state tax disappears. Sometimes it works. Often it does not, because a state can tax you for two reasons — where you live and where the ticket was sold.

Residence is the first hook: states with an income tax generally tax residents on all their income, wherever the ticket was bought. Live in New York and win on a Florida ticket, and New York taxes it — unless you have genuinely become a Florida resident first.

Source is the second hook, and it surprises people. New York treats prizes from its own lottery as New York source income — even for non-residents — when proceeds exceed $5,000, and the rule follows future annuity payments too. Its guidance says a winner who lived in New York at the drawing, moved away and came back only to collect still owes the tax.

So the tax cliff is narrower than the slogan: moving can remove your home state's tax, but not tax owed to the state whose lottery you won, if it taxes non-resident winners. And residency is a facts-and-circumstances test, not a mailing address — permanent home, family, voter registration, driver's license.

Local taxes on top of the state

Two places in New York charge income tax on top of the state's.

• New York City. Residents pay a city income tax that reaches 3.876% on city taxable income over $50,000. On the $41 million cash option that is roughly $1.59 million by itself.
• Yonkers. Residents pay a surcharge equal to 16.75% of their New York State tax — so the effective rate on income varies with the bracket. With a state bill of about $4.47 million, that adds roughly $750,000.

Elsewhere, local income tax on a jackpot is the exception. Maryland shows how layers appear in published numbers: 9.5% is withheld from a resident winner, 8.75% from a non-resident — a reminder that the rate at the prize counter may blend state and local tax. If your city or county taxes income, ask your CPA.

Five mistakes that cost winners millions

• Spending before April. The 24% withholding is not the bill. On a $41 million cash prize the federal shortfall alone is about $5.28 million, before any state tax.
• Claiming before talking to a CPA. The expensive decisions — cash versus annuity, residency, how to take the money — happen before you claim.
• Giving money away pre-tax. Gifts are made with after-tax dollars. Handing out $1 million before the tax is paid can leave you with a bill and no cash.
• Assuming the annuity is the safe choice. It spreads the income and the risk: three decades of tax-law changes, a different state's rules per payment, a rate that never drops below the top bracket.
• Fixing residency after the fact. What counts is where you were a resident when the prize was received; a later change of address does not undo the tax.

What to do if you win

1. 1Sign the ticket, store it safely and say nothing in public: an unsigned ticket is a bearer instrument.
2. 2Hire a CPA who has handled large prizes, and an estate attorney, before you walk into the lottery office.
3. 3Model both options: the cash value after federal and state tax, and the 30-year annuity after tax, in your own state.
4. 4Decide where you are a resident, and make that decision real before the prize is paid.
5. 5Set the tax money aside in a separate account the day the money arrives, and do not touch it.
6. 6Ask about anonymity and trusts where you live: disclosure rules differ, and some states let a trust claim.

None of this changes the odds, because nothing does — the conclusion we reached in do hot and cold numbers actually work?. It changes how much of a prize you keep. If you are still learning the games, start with how to play Powerball and how to play Mega Millions, and check the data on our Powerball and Mega Millions statistics pages. If the money stops being fun, responsible gaming help is one click away.

What $100 million becomes

Here is the same jackpot in five places, with the same assumptions: a single filer, the 2026 brackets, a $100 million advertised jackpot and a $41 million cash option.

Read the last column twice: the advertised jackpot is not a number anyone receives. The cash option cuts it to 41%, federal tax takes 37% of what remains and a high-tax state takes another 9% to 14%. In New York City, about $20 million of the $100 million survives.

The gap between the best and worst outcome is about $5.8 million on the same ticket — far more than any number choice could ever be worth. Where you live, decided before you claim, is the biggest financial decision a winner makes.