Lottery Tax Calculator: What a Jackpot Really Pays
Lottery jackpots are advertised before tax — sometimes dramatically so. Between the reduced cash option, 24% federal withholding, a final federal bill that usually lands in the 37% top bracket, and state withholding that ranges from zero to 10.9%, a "$500 million" win can pay out less than a third of the headline as an immediate lump sum. This calculator shows the arithmetic for your state and payout choice; the guide below it explains each step.
Use the cash figure the game itself reports — typically 45–55% of the advertised jackpot.
At jackpot scale most of the prize falls in the top federal bracket (37%), so expect a final federal bill closer to $88,800,000 — net roughly $151,200,000 after your return is filed.
Rates last verified 2026-08-16. Estimates only — withholding is not your final tax bill, and this is not tax advice.
How lottery taxes actually work
Two different numbers get conflated: withholding and your final tax bill. On any US lottery prize over $5,000 the lottery immediately withholds 24% for the IRS (prizes over $600 are reported on a W-2G either way). But withholding is only a down payment — a jackpot pushes almost all of the prize into the top federal bracket, 37% in 2026, so winners typically owe the difference between 24% and ~37% when they file. States that tax lottery winnings withhold their own percentage at payout on top, and a few add local slices (New York City, Maryland counties, Ohio municipalities) at filing time.
Lump sum or annuity: what you're actually choosing
The advertised jackpot is the annuity total: 30 graduated payments over 29 years, each 5% larger than the last, which together add up to the headline figure. The cash option is the money actually sitting in the prize pool today — typically 45–55% of the advertised jackpot, and the game publishes the exact figure for every draw. Neither choice escapes tax: the lump sum is taxed once at today's rates on the smaller amount, while each annuity payment is taxed in the year it arrives at whatever rates then apply. The annuity guarantees three decades of income and taxes the growth implicitly; the lump sum bets that your own investing (or spending) beats the annuity's built-in 5% escalation. Most US jackpot winners take the cash.
Why your state matters so much
State withholding is the biggest controllable variable in the net figure. Eight of the states in the calculator take nothing — Texas, Florida, Washington, Wyoming, South Dakota, Tennessee, New Hampshire have no income tax, and California exempts lottery winnings specifically. At the other end, New York withholds 10.9% and Maryland 8.75% from residents. On a $240 million cash option that spread is worth over $26 million. Our state hub pages cover the local rules game by game — see the Texas Lottery, Maryland Lottery or Virginia Lottery guides for worked examples.
Not a US resident? The 30% rule
Non-resident aliens — including players abroad who win through a lottery messenger service — face a flat 30% federal withholding on US gambling winnings instead of the resident 24%/37% structure, unless a tax treaty says otherwise. State withholding still applies based on where the ticket was sold. Some countries then tax the win again at home; others (like Australia — see our guide to playing US Powerball from Australia) don't tax lottery winnings at all, making the US withholding the final cost. The IRS rules are in Publication 515.
Lottery tax FAQs
How much tax do you pay on lottery winnings?
US prizes over $5,000 get 24% federal withholding immediately, but a jackpot is ultimately taxed mostly at the 37% top bracket when you file. State tax adds 0% (Texas, Florida, California and other no-tax states) to 10.9% (New York) on top, so a typical big-state winner nets roughly 55-65% of the cash value.
Is the lump sum or the annuity better after taxes?
Neither is tax-free: the lump sum taxes the smaller cash value once at today's rates; the annuity taxes each of 30 rising payments in the year it arrives. The lump sum wins if you invest it well; the annuity guarantees income and spreads the tax. Most US jackpot winners take the cash.
Which states don't tax lottery winnings?
Texas, Florida, Washington, Wyoming, South Dakota, Tennessee and New Hampshire have no state income tax, and California exempts lottery winnings specifically. Delaware withholds nothing at payout but taxes winnings on your state return.
How much of a $1 billion jackpot do you actually get?
Roughly $260-300 million as an immediate net lump sum in a no-tax state: the cash option runs about 45-55% of the advertised figure (say $480M), minus 24% federal withholding and a final federal bill near 37%. A high-tax state takes another 8-11% of the cash value.
Do foreigners pay US tax on lottery winnings?
Yes — non-resident aliens face a flat 30% federal withholding on US lottery prizes (treaty rates vary), plus state withholding where the ticket was sold. Whether you owe more at home depends on your country: Australia, for example, doesn't tax lottery winnings at all.