Lottery Tax Calculator 2026
Lottery winnings after tax: the cash option, 24% federal withholding versus the real 37% bill, state tax, the 30-year escalating annuity after tax, and whether investing the lump sum beats the annuity — with the break-even return.
| Cash option (lump sum before tax) | — |
|---|---|
| Federal withholding (24%) | — |
| Actual federal tax (37% top bracket) | — |
| Extra federal due at filing | — |
| State tax | — |
| Lump sum after all tax | — |
| Annuity: 30 payments rising 5% a year | — |
| Annuity after tax (total over 30 years) | — |
| Lump sum invested for 30 years vs annuity | — |
| Break-even investment return | — |
In short
A lottery jackpot's cash option is usually 45–52% of the advertised amount; the lottery withholds 24% federal tax, but nearly all of a large prize is taxed at 37%, so expect to owe the difference at filing, plus state tax of 0–10.9%. You net roughly 55–63% of the cash option. The annuity pays 30 instalments rising 5% a year and is taxed as received; the lump sum invested at more than about 4–5% after tax usually ends up larger.
Who this is for: Anyone holding a winning lottery, casino or sweepstakes ticket — or dreaming about one.
Lump sum or annuity?
- Cash option: the present value of the 30 annuity payments — usually 45–52% of the advertised figure, set by bond yields on the draw date.
- Tax: 24% is withheld on prizes over $5,000, but a jackpot lands almost entirely in the 37% bracket; add state tax of 0–10.9% (New York City winners pay state plus city). You net roughly 55–63% of the cash option.
- Annuity: 30 annual payments rising 5% a year, each taxed when received — more total dollars, and some protection against the 70% of winners who reportedly run through the money.
- Break-even: if you can earn more after tax than the implicit return in the annuity (typically 3–5%), the lump sum invested wins; at lower returns, or if you fear spending it, the annuity wins.
- Other winnings: the same tax rules apply to casino, sports-betting and raffle prizes; gambling losses are deductible only up to winnings — and only 90% of losses from 2026 under the 2025 law.
See also: US Federal Income Tax Calculator 2026, Gift & Estate Tax Calculator 2026.
Assumptions
- Cash option = jackpot × the percentage entered; federal tax = 2026 brackets on cash + other income minus tax on other income; withholding 24%.
- Annuity: 30 payments growing 5% a year that sum to the jackpot; each taxed as received at the same brackets.
- Lump sum vs annuity compared as future value at the return entered over 30 years; break-even solved by bisection.
Worked example
Cash option $240,000,000. Withholding $57.6 million, actual federal tax about $88.8 million (37.0%), so roughly $31.2 million more is due at filing; state tax $12.0 million. Lump sum after tax: about $139.2 million (27.8% of the headline). The annuity would pay $7.5 million in year 1 rising to $31.0 million in year 30 — about $291 million after tax in total. Invested at 5% the lump sum reaches about $573 million by year 30 versus about $541 million from investing each annuity payment; the break-even return is about 4.6%.
Frequently asked questions
How much tax do you pay on a $1 million lottery win?
About $370,000 federal at the 37% top rate on most of it (24% is withheld up front, the rest is due at filing) plus state tax of 0–10.9% — netting roughly $550,000–630,000.
Is the lump sum or annuity better?
The lump sum invested at more than about 4–5% a year after tax usually ends up larger and gives control; the annuity pays more in total, spreads tax over 30 years and protects against overspending.
Which states do not tax lottery winnings?
California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming have no tax on lottery prizes; most others withhold 3–8%, New York up to 10.9%.
Can I stay anonymous?
About a dozen states allow anonymous claims or claims through a trust; others publish winners' names.
Are gambling losses deductible?
Only if you itemise and only up to your winnings — and from 2026 only 90% of losses count, so a break-even gambler owes tax on 10% of wins.
Do I pay tax if I give some of the prize away?
Gifts over $19,000 per person use your $15 million lifetime exemption; the income tax is yours alone unless the ticket was owned jointly from the start (document pools before the draw).
Related calculators
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