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.

Federal Tax Obligations on Mega Millions Prizes
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%
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State Tax Witholdings on Mega Millions prizes
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.