Home › Guides › Lottery taxes by state
Lottery Taxes by State: The 2026 Map
Where you live changes a nine-figure prize by tens of millions of dollars. It also determines whether the amount withheld at the counter is the end of the matter — and in most states, it is not.
The advertised jackpot is the same everywhere. What lands in your account is not. On the $450.5 million cash option from the August 2026 Powerball jackpot, the gap between the best and worst U.S. residence is $66.6 million — on an identical ticket.
This is general information, researched from primary sources and cited at the foot of the page. It is not tax, legal or financial advice, and the author is not an attorney, CPA or licensed financial adviser. Rules differ by state and by individual circumstance, and they change. Before acting on anything involving a real prize, hire professionals licensed where you live.
1. The federal floor everyone pays
Before any state gets involved, federal tax applies identically everywhere:
- 24% is withheld by the lottery on proceeds over $5,000. That is a deposit, not a settlement.
- 37% is the top rate for tax year 2026, starting at $640,600 of taxable income for a single filer and $768,700 for joint filers. Any large jackpot is almost entirely in that bracket.
- So roughly 13 more cents on every prize dollar is due later, as estimated tax.
Non-resident aliens face 30% federal withholding instead of 24%, under a different code section, and are reported on Form 1042-S rather than W-2G.
The mechanics of that gap, and when the balance is actually due, are covered in the lump sum versus annuity guide. One 2026 change is worth repeating here, because it removes an offset that older articles still assume exists: the SALT deduction is effectively unavailable to a jackpot winner. The cap is $40,400 but phases down above $505,000 of income to a $10,000 floor. State tax paid no longer meaningfully reduces the federal bill.
2. The nine states that take nothing
These states levy no individual income tax at all, so lottery winnings are untaxed at state level:
Alaska · Florida · Nevada · New Hampshire · South Dakota · Tennessee · Texas · Washington · Wyoming
Two notes. New Hampshire only joined this list recently — it repealed its interest-and-dividends tax as of 2025 and now has no individual income tax at all. Washington taxes capital gains (7–9.9%) but not ordinary income, so lottery winnings escape; some tax surveys therefore count eight "no income tax" states and treat Washington separately.
Alaska and Nevada do not run a state lottery, so a resident would have to buy a ticket elsewhere — see section 7 for what that does.
3. California: highest rate in the country, zero on its own lottery
California has the highest top marginal income tax rate of any U.S. state at 13.30%. It also exempts California Lottery prizes entirely. The Franchise Tax Board states it directly: California does not tax winnings from the California Lottery, including SuperLotto, Powerball and Mega Millions purchased in California.
This is the single best tax outcome available to a jackpot winner who lives in a state with an income tax, and it puts California level with Florida and Texas.
It covers the California Lottery only. A California resident who wins another state's lottery is fully taxable in California at up to 13.30%, with a credit for tax paid to the other state. Buy a Powerball ticket while visiting Nevada or Oregon and the California exemption does not follow you.
4. Three states people wrongly believe are exempt
These come up constantly in comment threads and in articles that copy one another. All three are wrong.
- Pennsylvania taxes lottery winnings. Under Act 84 of 2016, the flat 3.07% personal income tax applies to Pennsylvania Lottery cash prizes paid from January 1, 2016, and the Lottery withholds it on prizes over $5,000. The exemption that people remember was real — it just ended a decade ago.
- Delaware taxes lottery winnings. The Delaware Lottery states plainly that all winning Delaware Lottery tickets are subject to Delaware income tax, at up to 6.60%. The confusion arises because Delaware does not withhold state tax at claim time — the money is still owed at filing, it simply arrives as a surprise instead of a deduction.
- Mississippi taxes lottery winnings. State law subjects prizes of $600 or more to state and federal withholding. Mississippi's flat rate dropped to 4.0% on January 1, 2026, which is low — but not zero.
South Dakota is sometimes listed as an "exempt" state; it simply has no income tax at all, so it belongs in section 2.
5. The top state rates
| Jurisdiction | Top rate | Notes |
|---|---|---|
| New York City | 14.776% | 10.90% state + 3.876% city. Highest combined burden in the country. |
| New York State | 10.90% | Applies above $25 million of income. High-income brackets extended through tax year 2032. Yonkers adds a surcharge. |
| New Jersey | 10.75% | NJ Lottery winnings taxable only above $10,000. |
| District of Columbia | 10.75% | |
| Oregon | 9.90% | |
| Minnesota | 9.85% | |
| Massachusetts | 9.00% | 5% flat plus the 4% surtax on income above $1,107,750 in 2026. |
| Vermont | 8.75% | |
| Wisconsin | 7.65% | |
| Maryland | 6.50% + county | State rate plus a county income tax; Maryland withholds 9.5% from residents, which implies a combined burden near that figure. |
| Mississippi | 4.00% | Flat; reduced from 4.4% on January 1, 2026. |
| Pennsylvania | 3.07% | Flat. Withholding equals the rate, so no balance due. |
| California | 0% / 13.30% | Zero on California Lottery prizes; up to 13.30% on another state's lottery. |
| Nine no-income-tax states | 0% | AK, FL, NV, NH, SD, TN, TX, WA, WY. |
Hawaii's 11.00% is the second-highest state rate in the country but rarely matters here: Hawaii has no state lottery, so it only reaches a Hawaii resident's out-of-state winnings.
6. The withholding gap: when 8% withheld means 10.75% owed
This is the part almost nobody writes about, and it is the state-level twin of the federal 24%-versus-37% problem. Several states withhold at a rate well below their own top marginal rate, so the deduction on the cheque understates the eventual bill.
| State | Withheld at claim | Top rate | Gap |
|---|---|---|---|
| New Jersey | 8.0% (over $500,000) | 10.75% | 2.75 pts |
| Minnesota | 7.25% | 9.85% | 2.60 pts |
| District of Columbia | 8.5% | 10.75% | 2.25 pts |
| Oregon | 8.0% | 9.90% | 1.90 pts |
| New York | highest effective rate | 10.90% | none |
| Pennsylvania | 3.07% | 3.07% | none |
New Jersey's schedule is worth spelling out because it is layered: nothing is withheld below $10,000, 5% applies from $10,001 to $500,000, and 8% above $500,000 — against a 10.75% top rate. Oregon withholds from $1,500 up. Minnesota and DC withhold above $5,000.
Maryland changed on July 1, 2025 and now withholds 9.5% from residents and 8.75% from non-residents on prizes over $5,000. The Comptroller's older guidance showing 8.75% and 7.00% is still indexed by search engines and is out of date — a live trap for anyone researching this.
New York publishes supplemental wage withholding rates — 11.70% state and 4.25% city for 2026 — that are used for bonuses, not lottery prizes. Several lottery tax calculators use those figures by mistake. New York's actual rule for lottery prizes is withholding at the highest effective rate of state tax with no allowance for deductions or exemptions, which for 2026 is 10.90% state and 3.876% city.
7. Buying a ticket out of state
People cross state lines to buy tickets, usually for a jackpot in a state they do not live in. The tax result is not what most expect.
Both states can assert a claim. The state where the ticket was bought taxes the prize as in-state source income for non-residents — New York states this explicitly, and Maryland maintains a separate non-resident withholding rate for exactly this reason. Your home state then taxes you on worldwide income and gives a credit for tax paid to the source state.
The practical outcome: you generally end up paying roughly the higher of the two rates, not the sum. A New Jersey resident who wins on a New York ticket pays New York's 10.90% and receives a New Jersey credit capped at New Jersey's own tax on that income. That is a synthesis of how the credit mechanics work rather than a quoted rule — credit caps and reverse-credit arrangements vary by state pair, and this is precisely the sort of thing to hand to a CPA.
Buying in a no-tax state does not help if you live in a taxing one — your home state still taxes you, and there is no source-state tax to credit against it. The only routes to zero state tax are to reside in one of the nine no-income-tax states, or to be a Californian winning the California Lottery. And residence is determined by where you actually lived when the prize was received; moving afterwards does not undo it, and states audit exactly this.
What to check before you do anything
- Your state's top marginal rate, not its withholding rate — and whether there is a gap between them.
- Whether your city adds a local tax. New York City and Yonkers do; Maryland counties do.
- If the ticket was bought out of state, both states' rules and how the credit works between them.
- Whether your state withholds nothing at claim time — Delaware — because the bill still arrives, just later.
- The dates. Rates change annually, and several of the figures above changed within the last eighteen months.
Sources
- Federal withholding and reporting: IRS Instructions for Forms W-2G and 5754; IRS Topic 419
- 2026 brackets: IRS Rev. Proc. 2025-32. SALT phase-down: IRS 1040-ES correction notice
- State top rates: Tax Foundation, State Individual Income Tax Rates 2026
- California exemption: California FTB, gambling income; FTB, other state tax credit
- Pennsylvania: PA Department of Revenue, lottery winnings. Delaware: Delaware Lottery FAQs
- New Jersey: NJ Division of Taxation. Oregon: Oregon Lottery. Minnesota: Minnesota Lottery
- New York: NY Publication 140-W. Maryland: Comptroller of Maryland tax alert
- Massachusetts surtax: Mass.gov