Three cuts stand between the headline and your bank account
The advertised jackpot is the annuity total paid over 30 years. Take it as one lump sum and you get the cash value, roughly 49% of the number. Then federal tax comes off, then state tax if your state charges it.
Federal withholding vs what you actually owe
The lottery withholds a flat 24% up front, but a big win is taxed on the progressive brackets below, most of it at the top 37% rate. The gap between 24% and your real rate is a bill you settle when you file.
| Taxable income (single, 2025) | Rate |
|---|---|
| Up to $11,925 | 10% |
| $11,925 – $48,475 | 12% |
| $48,475 – $103,350 | 22% |
| $103,350 – $197,300 | 24% |
| $197,300 – $250,525 | 32% |
| $250,525 – $626,350 | 35% |
| Over $626,350 | 37% |
Any jackpot in the millions lands almost entirely in the 37% bracket, so the effective federal rate sits just under 37%. The 24% withholding is a prepayment, not the final bill.
State tax varies from nothing to nearly 15%
| State | Lottery tax rate |
|---|---|
| CA, FL, TX, WA and 6 others | 0% |
| Pennsylvania | 3.07% |
| New Jersey | 6.37% |
| Oregon | 9.9% |
| Hawaii | 11% |
| New York (plus NYC) | 10.9% (14.876% in NYC) |
Tax generally follows the state where you live, not where you bought the ticket. In New York City the combined federal, state and city bite reaches about 52%.
Lump sum or annuity
- Lump sum is about 49% of the advertised jackpot, paid at once and taxed in a single year at the top rate. Best if you can invest it well.
- Annuity pays the full jackpot in 30 growing installments, spreading the income and often keeping more of it. Safer for anyone without an investment plan.
- Reality check. Between the lump-sum discount and taxes, a winner in a no-tax state keeps roughly a third of the advertised number; in a high-tax city, less.
Common questions
Why is the withholding only 24% when the tax can be 37%?
The 24% federal withholding is just a prepayment the lottery takes automatically. A large jackpot pushes most of the win into the top 37% bracket, so you owe the difference when you file. On a $10 million lump sum, about $2.4 million is withheld but roughly $3.7 million is actually due, leaving about $1.3 million to pay in April.
Which states do not tax lottery winnings?
Ten states take no state tax on lottery prizes: Alaska, California, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. The federal tax of up to 37% still applies everywhere.
How much of the advertised jackpot do I actually keep?
Far less than the headline. Taking the lump sum first cuts the number to roughly 49% of the advertised amount, then federal and state tax come off that. A high earner in a high-tax city can end up with around 30% of the advertised jackpot.
