State Lottery Tax Rates: The Complete 2026 Guide

Federal income tax applies equally to lottery winners across the entire country. State taxes are a different matter entirely. Rates range from zero in several states to nearly 11 percent in others, and on a large jackpot that spread can translate to tens of millions of dollars. This guide covers the state income tax rate on lottery winnings for all 47 US jurisdictions where Powerball and Mega Millions are sold.

All rates listed reflect the top marginal state income tax rate applicable to large lottery prizes. Your actual tax liability may vary based on individual circumstances. Consult a qualified tax professional before making financial decisions.

States With No Tax on Lottery Winnings

These states impose no state income tax on lottery winnings. Winners owe only federal income tax.

• California — 0% (lottery winnings specifically exempt from state income tax)
• Florida — 0% (no state income tax)
• New Hampshire — 0% (no tax on lottery prizes)
• South Dakota — 0% (no state income tax)
• Tennessee — 0% (no state income tax)
• Texas — 0% (no state income tax)
• Washington — 0% (no state income tax)
• Wyoming — 0% (no state income tax)

California deserves a note. It has one of the highest state income tax rates in the country on ordinary income, but lottery prizes are specifically excluded from California state income tax by statute. This is counterintuitive and frequently surprises people who assume California takes a large cut.

Low Tax States (Under 5%)

• Arizona — 2.5%
• Colorado — 4.4%
• Georgia — 5.39%
• Idaho — 5.8%
• Michigan — 4.25%
• Mississippi — 4.7%
• Missouri — 4.8%
• Montana — 5.9%
• North Dakota — 2.5%
• Oklahoma — 4.75%
• Pennsylvania — 3.07%

Mid-Range Tax States (5% to 7.5%)

• Arkansas — 4.9%
• Connecticut — 6.99%
• Delaware — 6.6%
• Illinois — 4.95%
• Indiana — 3.15%
• Iowa — 5.7%
• Kansas — 5.7%
• Kentucky — 4.5%
• Louisiana — 4.25%
• Maine — 7.15%
• Maryland — 8.75%
• Massachusetts — 5.0%
• Nebraska — 5.84%
• New Mexico — 5.9%
• North Carolina — 4.75%
• Ohio — 3.75%
• Rhode Island — 5.99%
• South Carolina — 6.5%
• Vermont — 8.75%
• Virginia — 5.75%
• West Virginia — 6.5%
• Wisconsin — 7.65%

High Tax States (7.5% and Above)

• Minnesota — 9.85%
• New Jersey — 10.75%
• New York — 10.9%
• Oregon — 9.9%
• Washington D.C. — 10.75%

Other Jurisdictions

• U.S. Virgin Islands — 10.5% (federal territory with its own income tax structure)

The New York City Surcharge

Winners who reside in New York City face an additional layer on top of the state rate. New York City imposes its own income tax of up to 3.876 percent. Combined with the state rate of 10.9 percent, a New York City resident's combined state and local tax rate on lottery winnings approaches 14.8 percent, making it the highest effective combined rate in the country for lottery winners.

Other cities with local income taxes that may apply to lottery winnings include Philadelphia (3.75% for residents), and several Ohio cities including Columbus, Cleveland, and Cincinnati. If you live in a city with a local income tax, verify whether it applies to lottery prizes.

How Much Does the State Rate Actually Cost?

The dollar impact of state tax rates becomes most visible on large jackpots. Here is the difference in after-tax take-home on a $500 million jackpot (lump sum cash value approximately $300 million, after federal taxes approximately $189 million) between a zero-tax state and the highest-tax states:

• Florida or Texas (0%): approximately $189 million
• Michigan (4.25%): approximately $176 million
• Oregon (9.9%): approximately $159 million
• New York (10.9%): approximately $156 million
• New York City resident (10.9% + 3.876%): approximately $145 million

The gap between winning in Florida and winning in New York City on the same $500 million jackpot is approximately $44 million. That is money that goes to state and local governments rather than to the winner, and it cannot be recovered.

Which State's Tax Rate Applies to You?

Your state of legal residence at the time you claim the prize determines which state taxes apply, not the state where you bought the ticket. If you live in New York but bought your ticket during a trip to Florida, New York taxes your winnings. Where you purchase the ticket is largely irrelevant to your state tax obligation.

Some states withhold taxes on prizes claimed by nonresidents. If you win in a state that withholds from nonresidents, your home state typically provides a credit for those taxes paid to avoid double taxation. The exact rules vary and a tax professional can walk you through how the credit works in your situation.

Use our calculator to see the estimated after-tax take-home for your specific state and jackpot amount. All 47 jurisdictions are supported.