Mega Millions Taxes
Winning a Mega Millions lottery prize can change your life. However, players must be aware that Mega Millions winnings are subject to both federal and state tax. The amount of tax payable varies from jurisdiction to jurisdiction and residence status in states such as Arizona and Maryland can also affect take home winnings.
The tables below display the obligations for federal tax and the tax withholding rates for each jurisdiction. It’s important to note that state withholding amounts refer to each state’s top rate and that states modify their tax withholding rates occasionally. Players are also advised to check with their local tax authority for further information.
| Prize | Federal Tax Obligations |
|---|---|
| $1-$600 | No deductions |
| $600.01 - $5,000 | Winnings must be reported on federal income tax form |
| $5,000.01 and above (excluding the jackpot) | 25% |
| Jackpot | 39.6% |
| Jurisdiction | State Withholding |
|---|---|
| Arizona | Residents 4.8%, Non-Residents 6% |
| Arkansas | 4.9% |
| California | No state tax on lottery prizes |
| Colorado | 4% |
| Connecticut | 6.99% |
| Delaware | 6.6% |
| Florida | No state tax on lottery prizes |
| Georgia | 5.75% |
| Idaho | 6.5% |
| Illinois | 4.95% |
| Indiana | 3.23% |
| Iowa | 5% |
| Kansas | 5% |
| Kentucky | 5% |
| Louisiana | 4.25% |
| Maine | 7.15% |
| Maryland | Residents 8.95%, Non-Residents 8% |
| Massachusetts | 5% |
| Michigan | 4.25% |
| Minnesota | 7.25% |
| Missouri | 4% |
| Montana | 6.9% |
| Nebraska | 5% |
| New Hampshire | No state tax on lottery prizes |
| New Jersey | Residents 5-8%, Non-Residents 8% |
| New Mexico | 6% |
| New York State | 10.9% |
| New York City | 3.876% (in addition to state tax) |
| Yonkers, New York | 1.825% (in addition to state tax) |
| North Carolina | 5.25% |
| North Dakota | 2.9% |
| Ohio | 4% |
| Oklahoma | 4% |
| Oregon | 8% |
| Pennsylvania | 3.07% |
| Puerto Rico | No state tax on lottery prizes |
| Rhode Island | 5.99% |
| South Carolina | 6.5% |
| South Dakota | No state tax on lottery prizes |
| Tennessee | No state tax on lottery prizes |
| Texas | No state tax on lottery prizes |
| U.S. Virgin Islands | No state tax on lottery prizes |
| Vermont | 6% |
| Virginia | 4% |
| Washington State | No state tax on lottery prizes |
| Washington D.C. | 8.5% |
| West Virginia | 6.5% |
| Wisconsin | 7.65% |
| Wyoming | No state tax on lottery prizes |
The Fine Print
For any single prize greater than $600, state lottery agencies must notify the Internal Revenue Service (IRS). Anyone who claims a prize of between $600.01 and $5,000 will be issued with a W-2G form and are required to report their winnings on their federal income tax form.
If you win a jackpot prize, a federal tax of 25 percent is taken immediately, before you receive your winnings. The remaining 14.6 percent is due at the beginning of the next tax year. Players must note that if you don’t have a Social Security number, you will have to pay a federal tax of 28 percent, instead of the 25 percent. Foreigners are also subject to a slightly higher federal tax of 30 percent, in addition to the 14.6 percent.
Players who win the jackpot can decide to take a one-off cash lump sum or accept an annuity (30 annual payments over 29 years). A W-2G form will be issued to show that the 25 percent federal tax has been paid.
In addition to federal withholding, players will need to check the tax regulations for lottery winnings in their own state, as each state has their own specific tax obligations which can change from time to time.
Tax payable can also depend on an individual’s circumstances and, if a Mega Millions ticket was bought in a different state, tax is charged at the rate of whichever of the two jurisdictions is higher.
As taxation on lottery winnings is variable depending on jurisdiction and personal factors, it is recommended that anyone who wins a substantial Mega Millions prize seeks the advice of a financial expert.