How lottery winnings are taxed
- Federal withholding: the lottery holds back 24% of prizes over $5,000 and sends it to the IRS.
- Federal income tax: winnings are added to your other income. Most of a large prize falls in the top 37% bracket (above $640,600 for single filers in 2026), so you will owe roughly 13% more when you file.
- State and local tax: most states tax winnings at their income tax rates. A few cities, like New York City, add their own tax.
2026 federal tax brackets
| Rate | Single | Married filing jointly |
|---|
| 10% | Up to $12,400 | Up to $24,800 |
| 12% | $12,401 – $50,400 | $24,801 – $100,800 |
| 22% | $50,401 – $105,700 | $100,801 – $211,400 |
| 24% | $105,701 – $201,775 | $211,401 – $403,550 |
| 32% | $201,776 – $256,225 | $403,551 – $512,450 |
| 35% | $256,226 – $640,600 | $512,451 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
If you win big
- Sign the back of the ticket and keep it somewhere safe.
- Before claiming, talk to a tax professional, an estate attorney and a fee-only financial planner.
- Check your state's rules on staying anonymous and claim deadlines.
- Set aside money for the tax still owed above the 24% withholding.
The odds of winning a Powerball jackpot are 1 in 292,201,338. For a fun alternative, try the random number generator to pick your numbers. Planning what to do with a windfall? See the investment calculator.
Last reviewed October 2026.
Frequently asked questions
How much tax do you pay on lottery winnings?
Lottery winnings are taxed as ordinary income. For prizes over $5,000, the lottery withholds 24% for federal tax up front. A large jackpot puts you in the top 37% bracket, so you usually owe more when you file. Most states also tax winnings, at rates from about 3% to over 10%.
Lump sum or annuity: which is better?
The lump sum is the cash value, usually around half of the advertised jackpot, paid at once. The annuity pays the full jackpot over 30 years, with each payment 5% bigger than the last (for Powerball and Mega Millions). The lump sum gives control and investing potential; the annuity protects against overspending and spreads taxes over time.
Which states do not tax lottery winnings?
California and Delaware do not tax state lottery winnings, and states with no income tax (Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) also take nothing. Alaska and Nevada have no state income tax and no state lottery.
Why is the advertised jackpot so much bigger than the cash value?
The advertised jackpot is the total of 30 annual payments. The cash option is what the lottery would need to invest today to fund those payments, so it is much smaller, often 45% to 50% of the headline number depending on interest rates.
Is this calculator exact?
It is an estimate. It uses 2026 federal brackets with the standard deduction, your other income and the state rate you choose. Local taxes (like New York City's), deductions, and future tax law changes for annuity payments can change the result. Talk to a tax professional before claiming a large prize.