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Taxes On Lottery Winnings by State 2021

There’s no doubt that winning the lottery is exciting and can significantly help the winner financially; however, the winner must not be too quick to spend all of his or her winnings. Like other income in the United States, the IRS taxes lottery winnings.

Lottery winnings are considered ordinary taxable income for both federal and state tax purposes. Winnings are taxed the same as wages or salaries are, and the total amount the winner receives must be reported on their tax return each year. Before the winner receives any of the money, however, the IRS automatically takes 24% of the winnings. The rest of the winnings are expected to be paid by the winner when filing the return.

What is the tax rate for lottery winnings? For federal taxes, lottery winnings are taxed according to the federal tax brackets. Federal tax brackets are progressive, so portions of the winnings are taxed at different rates, and could be as high as 37%. State income taxes vary by location. Some states do not have a state income tax, while others may withhold up to 8.82%.

The states that do not levy an individual income tax are:

Six states do not have a lottery: Alabama, Alaska, Hawaii, Mississippi, Nevada, and Utah. Two states, California and Delaware, do have a lottery but do not tax winnings.

If the winner buys a winning ticket in a state that they do not live in, most states will not withhold the winnings. Out of the 43 states that participate in multistate lotteries, only Arizona and Maryland tax the winnings of people who live out of state.

Here are the 10 states with the highest taxes on lottery winnings:

  1. New York (8.82%)
  2. Maryland (8.75%)
  3. New Jersey (8.00%)
  4. Oregon (8.00%)
  5. Wisconsin (7.65%)
  6. Minnesota (7.25%)
  7. Arkansas (7.00%)
  8. South Carolina (7.00%)
  9. Connecticut (6.99%)
  10. Idaho (6.92%)
Taxes On Lottery Winnings by State 2021 There’s no doubt that winning the lottery is exciting and can significantly help the winner financially; however, the winner must not be too quick to spend

North Carolina Powerball Jackpot Annuity Payout Schedule for Jan 30, 2021

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The tax information provided here is based on 2021 federal marginal rates and state tax rates. It shows the final federal and state tax burdens each year, not the amount initially withheld by the lottery.

The Powerball annuity jackpot is awarded according to an annually-increasing rate schedule, which increases the amount of the annuity payment every year. The table below shows the payout schedule for a jackpot of $30,000,000 for a ticket purchased in North Carolina, including taxes withheld.

Please note, the amounts shown are very close approximations to the amount a jackpot annuity winner would receive from the lottery every year. They are not intended to specify the exact final tax burden, which may vary depending on how the winner chooses to invest or dispense their prize money, as well as deductions claimed.

North Carolina

Federal Filing Status:

Year Gross Payment Federal Taxes State Taxes Net Payment
1 $451,543 $132,584 $23,706 $295,253
2 $474,120 $140,486 $24,891 $308,743
3 $497,826 $148,783 $26,136 $322,907
4 $522,718 $157,495 $27,443 $337,779
5 $548,853 $167,148 $28,815 $352,891
6 $576,296 $177,302 $30,256 $368,739
7 $605,111 $187,963 $31,768 $385,379
8 $635,366 $199,158 $33,357 $402,852
9 $667,135 $210,912 $35,025 $421,198
10 $700,491 $223,254 $36,776 $440,462
11 $735,516 $236,213 $38,615 $460,688
12 $772,292 $249,820 $40,545 $481,926
13 $810,906 $264,108 $42,573 $504,226
14 $851,452 $279,109 $44,701 $527,641
15 $894,024 $294,861 $46,936 $552,227
16 $938,726 $311,401 $49,283 $578,042
17 $985,662 $328,767 $51,747 $605,147
18 $1,034,945 $347,002 $54,335 $633,608
19 $1,086,692 $366,148 $57,051 $663,492
20 $1,141,027 $386,252 $59,904 $694,871
21 $1,198,078 $407,361 $62,899 $727,818
22 $1,257,982 $429,526 $66,044 $762,412
23 $1,320,881 $452,798 $69,346 $798,737
24 $1,386,925 $477,235 $72,814 $836,877
25 $1,456,271 $502,893 $76,454 $876,925
26 $1,529,085 $529,834 $80,277 $918,974
27 $1,605,539 $558,122 $84,291 $963,127
28 $1,685,816 $587,824 $88,505 $1,009,487
29 $1,770,107 $619,012 $92,931 $1,058,165
30 $1,858,612 $651,759 $97,577 $1,109,276
Total $30,000,000 $10,025,130 $1,575,001 $18,399,869

Note: The Net Payment total above may be a few dollars off from the total after-tax annuity amount shown on the Jackpot Analysis page because the Jackpot Analysis page shows an average annual payment, whereas we calculate an exact payment here.

Powerball annuity chart shows the annual net payout a North Carolina jackpot winner would get after federal and state taxes. ]]>