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The Virginia Lottery regulates lottery gaming, sports betting, and casino gaming for the Commonwealth of Virginia. Select one of the links below to view our law and regulations:

The Virginia Lottery regulates lottery gaming, sports betting, and casino gaming for the Commonwealth of Virginia. Select one of the links below to view our law and regulations:

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The Virginia Lottery regulates lottery gaming, sports betting, and casino gaming for the Commonwealth of Virginia.

Virginia Law

Administrative Code

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23VAC10-140-282. Withholding on lottery prizes.

A. Amount to be withheld. The Lottery Department shall withhold Virginia income tax at the rate of 4.0% on the proceeds from any lottery prize in excess of $5,000. The tax shall be withheld on the entire amount of the prize, not merely the amount in excess of $5,000. The tax must be withheld by the Lottery Department on the date of actual or constructive payment, whichever is earlier, as defined in federal Treasury Regulation § 31.3402(a)-1. Constructive payment means when the amount awarded is credited to the account of the taxpayer or set apart for future withdrawals, although not actually reduced to possession.

B. Prizes subject to withholding. Withholding is required on (i) any payment of proceeds in excess of $5,000; (ii) any installment payment of $5,000 or less, if the aggregate proceeds from a wager exceed or will exceed $5,000 or (iii) any periodic payment of $5,000 or less, when payments are to be made for the life of a person (or for the lives of more than one person), if it is actuarially determined that the aggregate proceeds from a wager are expected to exceed $5,000.

The provisions of this section may be illustrated as follows:

Example 1: “A” purchases a lottery ticket of $1.00 in the state lottery from an authorized agent. The drawing is held and “A” wins $5,000. Since the proceeds of the wager are not greater than $5,000, the Lottery Department is not required to withhold or deduct any amount from “A’s” prizes.

Example 2: Assume the same facts as in Example 1 except that “A” wins $5,001. The Lottery Department must deduct and withhold tax at a rate of 4.0% from $5,000 or $200.04.

Example 3: “B” purchases a lottery ticket for $1.00 in the state lottery from an authorized agent. The lottery drawing is held and “B” wins the grand prize, $50,000, payable at the rate of $1,000 a month. The Lottery Department must deduct and withhold at the rate of 4.0% on each monthly payment.

Example 4: “C” purchases a ticket for $1.00 in the state lottery from an authorized agent. The drawing is held and “C” wins $1,000 a year for the rest of “C’s” life. It is actuarially determined that “C’s” life expectancy is 10 years. Based on that determination, the proceeds from the wager paid to “C” will exceed $5,000. Therefore, the Lottery Department must deduct and withhold 4.0% X $1,000 = $40 from each year’s payment.

C. Persons subject to withholding.

1. Residents and part-year residents. All persons who qualify as residents and part-year residents of Virginia as defined under Chapter 3 of Title 58.1 of the Code of Virginia are subject to withholding for lottery prizes in the amount designated in subsection A above.

2. Nonresidents. Withholding will be required for all nonresident lottery winners. Nonresidents will be required to file a nonresident return when Virginia gross income, including lottery prizes, exceeds the thresholds in § 58.1-321 of the Code of Virginia. Any nonresident who has become liable to his state of residence for income tax on Virginia source income may become eligible for a credit as provided in § 58.1-332 of the Code of Virginia.

§§ 58.1-203 and 58.1-4006(B)(1) of the Code of Virginia.

Derived from VR630-6-4006 § 3, eff. November 21, 1990.

Website addresses provided in the Virginia Administrative Code to documents incorporated by reference are for the reader’s convenience only, may not necessarily be active or current, and should not be relied upon. To ensure the information incorporated by reference is accurate, the reader is encouraged to use the source document described in the regulation.

As a service to the public, the Virginia Administrative Code is provided online by the Virginia General Assembly. We are unable to answer legal questions or respond to requests for legal advice, including application of law to specific fact. To understand and protect your legal rights, you should consult an attorney.

Virginia Law Administrative Code Creating a Report: Check the sections you’d like to appear in the report, then use the “Create Report” button at the bottom of the page to generate your