Apollo AI Learn Team · · 6 min read
The advertised prize and the amount you take home are rarely the same. Here's a general picture of how US lottery winnings are taxed.
Winnings count as income
The IRS treats lottery prizes as taxable income, whatever the amount. Small prizes still belong on your tax return.
Federal withholding on bigger prizes
For prizes over $5,000, the lottery generally withholds 24% for federal taxes before paying you. Large jackpots can land in the top federal bracket of 37%, so you may owe more when you file.
State and local taxes
State treatment varies widely. Some states don't tax lottery winnings at all, while others withhold at their own rate. A few cities add local tax too.
Keep records
- Save any tax forms the lottery gives you
- Note the date, game and amount of each prize
- Ask a tax professional about large wins before claiming
General information only, not tax advice. Rules can change; check IRS guidance and your state revenue department.
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