Depending on where you are from and which lottery game you decided to play, you will lose some of your lottery winnings to pay taxes. That is part of the game, but most people do not know that the disclosed jackpot prize is often close to halved after taxes and reductions applied to lump-sum payments. Fortunately, the lottery tax calculator can assist you and everyone else.
Aside from using one of the best lottery tools, you can also make good use of the information we brought you regarding how taxes are calculated. Your country or the one where your favorite lotto occurs is most probably listed here as well.
Free Lottery Tax Calculator by State
Federal rate:
24%
State rate:
0
%
More tax/payout calculators: Powerball / MegaMillions
After deciding where you will have the best odds and fewer losses to taxes, do not forget to give preference to the reviewed the best lottery websites for your safety.
Quick Jump
What is the Tax Rate for Lottery Winnings?
Similar to how income tax works, there are different levels on which varied tax rates apply. At a progressive rate, the more you win playing the lottery, the bigger the percentage owed to the government or responsible authority.
Usually, those levels vary according to the country, state, and even city in which the lottery headquarters is located. We want to use the way tax rates work for the United States lotteries as an example to make it clearer.
Taxes on Lottery Winnings in the United States
Understanding how taxes are applied in the United States is useful for both residents and non-residents of the American country. There are different levels for each situation and prize, and the impact on the total winnings can be meaningful, especially when it is not a large amount.
| Tax Type | Rate |
|---|---|
| Federal Tax | 24% – 30% |
| State Tax | 0% – 8.82% |
| Local Taxes | 1% – 5% |
US Federal Taxes
The U.S. federal taxes deduct 24% or 30% from the prizes won by residents and non-residents, respectively. That does not apply to all prizes, and players who will receive less than $5,000 should not worry about this specific tax. Below, we brought you a table with specific information regarding federal taxes for residents:
| Prize Range | Total Tax |
|---|---|
| Up to $600 | 0% |
| $600 – $5,000 | 0%, winnings must be reported |
| $5,000+ | From 24% and up to 37% (income tax) |
Federal Personal Income Tax
The catch for residents of the U.S. is the fact that their winnings should be informed when they file their income tax returns. Therefore, on top of the 24% loss for federal taxes, they might have to pay up to 37% if they win a jackpot prize. That occurs because prizes above $600 are also considered “income” and are added up to your total income that year.
A similar condition might apply in your country of residence, which is why we recommend taking a look at the local legislation in that regard.
US State Taxes
Although far lower than the federal taxes, state taxes are applied on top of those and might represent a large loss for some winners and nothing for others. The highest taxes come from the states of New York and Maryland, with 8.82% and 8.75%, respectively.
We built a complete table with all the states that do charge some degree of state taxes. Out of it are states without lotteries, namely Alabama, Alaska, Hawaii, Mississippi, Nevada, and Utah. Also, other states like California, Delaware, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not charge state taxes.
Here are those that will take some of your winnings from you:
| State | State Tax |
|---|---|
| New York | 8.82% |
| Maryland | 8.75% |
| District of Columbia | 8.5% |
| New Jersey | 8% |
| Oregon | 8% |
| Wisconsin | 7.65% |
| Minnesota | 7.25% |
| Arkansas | 7% |
| South Carolina | 7% |
| Connecticut | 6.99% |
| Idaho | 6.92% |
| Montana | 6.9% |
| West Virginia | 6.5% |
| New Mexico | 6% |
| Vermont | 6% |
| Rhode Island | 5.99% |
| Georgia | 5.75% |
| North Carolina | 5.5% |
| Arizona | 5% |
| Iowa | 5% |
| Kansas | 5% |
| Kentucky | 5% |
| Louisiana | 5% |
| Maine | 5% |
| Massachusetts | 5% |
| Nebraska | 5% |
| Illinois | 4.95% |
| Michigan | 4.25% |
| Colorado | 4% |
| Missouri | 4% |
| Ohio | 4% |
| Oklahoma | 4% |
| Virginia | 4% |
| Indiana | 3.23% |
| Pennsylvania | 3.07% |
| North Dakota | 2.9% |
The US States Reciprocal Tax Agreements
Although it is possible to cross states to play other local games (e.g., you are from Florida and decides to play when in New York), you might want to consider the tax implications first. Some states have reciprocal tax agreements, meaning that you will only have to pay taxes once. On the other hand, when not available, you might have to pay twice.
As always, we saved you time and perhaps a good amount of money by indicating the states with reciprocal tax agreements here at LotteryTexts:
| State | Reciprocity States |
|---|---|
| Arizona | California, Indiana, Oregon, and Virginia |
| Illinois | Iowa, Kentucky, Michigan, and Wisconsin |
| Indiana | Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin |
| Iowa | Illinois |
| Kentucky | Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia, and Wisconsin |
| Maryland | Pennsylvania, Virginia, Washington, D.C., and West Virginia |
| Michigan | Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin |
| Minnesota | Michigan and North Dakota |
| Montana | North Dakota |
| North Dakota | Minnesota and Montana |
| Ohio | Indiana, Kentucky, Michigan, Pennsylvania, and West Virginia |
| Pennsylvania | Indiana, Maryland, Ohio, Virginia, and West Virginia |
| Virginia | Kentucky, Maryland, Pennsylvania, Washington, D.C., and West Virginia |
| Washington, D.C. | Maryland and Virginia |
| West Virginia | Kentucky, Maryland, Ohio, Pennsylvania, and Virginia |
| Wisconsin | Illinois, Indiana, Kentucky, and Michigan |
Municipality or Local Tax Rates
Municipalities and counties are also entitled to charging taxes on lottery winnings. It varies from 1% to 5%, and most municipalities will not apply it. Therefore, to be sure, take a look at your local regulation in that regard.
Deductions for Gambling Losses
In the United States, playing the lottery and losing can incur tax deductions, according to the Internal Revenue Service (IRS). However, it is necessary to keep a record of wins and losses, including evidence and the tickets.
On the IRS website, you can obtain the tax form of number 1040 and indicate your losses, as long as your deductions do not exceed your income from all forms of gambling. In the case of receiving annuity payments, the payment every year will count as a win for the gambling income.
Lottery Tax Rates in All Countries
As long as playing the online lottery is legal in your country, you can play lottery games from all around the world. As a consequence, you will be subject to the taxes applied in your home country upon the arrival of the money and, before that, in the lottery’s country. Therefore, it is essential to know how lottery tax rates work in different countries.
| Country | Tax Rate |
|---|---|
| Australia | Tax-free |
| Austria | Tax-free |
| Canada | Tax-free |
| France | Tax-free |
| Germany | Tax-free |
| Ireland | Tax-free |
| Japan | Tax-free |
| South Africa | Tax-free |
| The United Kingdom | Tax-free |
| Poland | – Tax-free up to PLN 2,280.
– 10% tax above PLN 2,280. |
| Colombia | – Tax-free up to COP 70,000.
– 20% tax above COP 70,000. |
| Mexico | 1% federal tax + state tax 1.65% – 7% |
| Russia | – 10% tax if you stay at least 184 days a year in the country;
– 30% tax if you stay less than 184 days a year in the country. |
| Peru | 10% tax on all winnings. |
| Italy | – Retailer fees on winnings between €100 and €500;
– 12% tax above €500 |
| Brazil | 13.8% taxes on all winnings |
| Chile | 17% tax on all winnings |
| Ukraine | 19.5% tax on all winnings |
| Portugal | 20% on winnings above €5,000 |
| Spain | 20% on winnings above €40,000 |
| Romania | – 1% on winnings up to RON 66,750;
– 16% tax + flat fee of RON 667.50 on winnings from RON 66,750 to RON 445,000; – 25% tax + flat fee of RON 61,187.50 above RON 445,000. |
| India | 28% tax |
How to Use the Lottery Tax Calculator for Your Home Country Taxes?
After checking the tax applicable to your country, indicate the total prize on the lottery tax calculator. Calculate the taxes in the country of the lottery first if you are playing overseas, and use the after taxes amount to eliminate your home taxes as well.
If you opt for an annuity prize, make sure to specify the number of years, or leave it as 1 if you opt for a lump sum. Write the percentage tax and press “Calculate”.
Lottery Winning Taxes in Australia
Players who win prizes in Australia do not have to pay taxes. As a foreigner, you can enjoy games like Powerball Australia and Oz Lotto. Just do not forget to check taxes that are applied in your home country, as that is where the jackpot prize (starting at AUD 3 million for Powerball) will go.
Lottery Winning Taxes in Brazil
All winnings obtained in lottery games in Brazil, such as the popular Mega-Sena, are taxed at 13.8%. Regardless of how big or small the prize is, that portion is always deducted. Therefore, if you are not Brazilian, make sure to also consider your home taxes regarding that type of income on top of that applied by the country.
Lottery Winning Taxes in Canada
Canadians take everything home when they win prizes in games like Lotto 6/49, with a minimum jackpot starting at CAD 5 million. That huge sum can be yours, too, but you need to make sure how much can be deducted from the total received according to your local regulation.
Lottery Winning Taxes in France
Just like Canada, France is another country that does not charge fees on lottery winnings. That includes the popular game France Lotto, with a minimum jackpot of €2 million. That guaranteed sum may go in full to French players, but you must consider the laws in your country if you are not from France.
Lottery Winning Taxes in Germany
If you manage to hit a secondary prize or the jackpot playing a German lottery game, such as Lotto 6aus49, you do not have to pay a single penny in taxes for it. Everything that the game discloses as a prize is given in full to the winners.
Lottery Winning Taxes in India
Imagine having to pay 28% in taxes on your precious lottery winnings. Although it sounds like the full lottery taxes applied to players in the United States, that is the harsh condition for players of lottery games in India. Believe it or not, the tax used to be even higher, at 30.9%. Therefore, think twice before playing in India.
Lottery Winning Taxes in Italy
Similar to the United States, low lottery winnings are not charged in Italy. Winning secondary prizes that give you up to €500 will not incur in taxes, but anything above €100 and up to that amount might result in small retailer fees. When you are lucky and get above €500, you are charged a total of 12%. Since you will have to pay anyway, consider playing the best game in Italy, SuperEnalotto.
Lottery Winning Taxes in Russia
Instead of charging lottery taxes on winnings according to their size, Russia prefers to apply an approach that considers the time spent in the country. Everyone who spends at least 184 days every year in Russia has to pay “only” 10% on lottery winnings as taxes. However, staying less than that result in a harsh tax of 30%,
Lottery Winning Taxes in Spain
Spain has great lottery games like La Primitiva and El Gordo, but players of big winnings should be aware of its taxes. If you win more than €40,000, or basically any jackpot, you will have to leave 20% of the total prize to the Spanish government.
Lottery Winning Taxes in the UK
Lottery winners are free from taxes applied by the UK government, regardless of their home country. Therefore, jackpots earned playing, for example, The Health Lottery, are given exactly as disclosed by the authority.
Lottery Taxes and Payment Options
Whenever reading the stories of lottery winners, you probably noticed that the total prize decreases a lot not because of taxes only, but when they choose the lump-sum payment. In fact, the amount disclosed as the jackpot prize is only applicable to the annuity option.
Take, as an example, a prize of $10 million without taxes. If you opt for the option that divides the prize into 30 equal annuities, you will receive $333,333.33 every year for 30 years. However, the lump-sum payment might reduce the total prize even up to 20%.
Lump-Sum Payments Vs Annuities
Comparing the two of them is not hard, and there is an obvious tradeoff that winners should consider. The lump-sum payment is given all at once in exchange for giving up on a considerable part of the prize. On the other hand, receiving the total prize in annuities might not make you rich from day to night, as you will get a small portion every year.
In summary, we brought the pros and cons of both options:
| Method | Pros | Cons |
|---|---|---|
| Lump-Sum Payment | – You will receive the prize all at once.
– Best for short-term plans and investments. |
– Considerable reduction of the total prize.
– Higher risk of not managing all that money correctly. |
| Annuity | – Consistent income for up to three decades.
– Prevents bad management of the money won. – Preserves the entire prize. |
– It might take time to become a millionaire.
– The cash value can reduce over time. |
Therefore, there is no correct option, as it is a matter of preferences. Do not forget to use the lottery tax calculator for both annuity and lump-sum payments.
How to Use the Lottery Tax Calculator for Lump-Sum Payments?
Add the total value of the prize and keep the length as “1”, as in one single payment. Add the total tax rate of the lottery country and calculate. If there are any taxes applied in your country to winnings in other countries, carry out the same process, now with the adjusted prize and your local taxes.
