Lottery Tax Calculator: Lump Sum vs Annuity
See exactly what you'd take home from a Powerball or Mega Millions jackpot after federal and state taxes. Compare the lump sum cash payout against the 30-year annuity option.
Quick answer: How much do you actually take home?
On a $100 million advertised jackpot, the lump sum is roughly $48 million cash. Federal tax (37%) takes about $17.8M. State tax adds another $0 to $5.2M depending on your state. You walk away with somewhere between $25M and $30M. Use the calculator below for your exact state and prize amount.
State tax is based on where you live, not where you bought the ticket.
Lump Sum
Cash payout, taken now
30.4% of advertised jackpot
Annuity
30-year payment plan
63.0% of advertised jackpot
On a $100,000,000 jackpot in California, you take home about $30,366,000 with the lump sum, or $2,100,000/year for 30 years with the annuity ($63,000,000 total).
Federal Tax Brackets (2026)
The IRS withholds 24% on lottery prizes over $5,000, but your actual rate depends on your bracket.
| Bracket | Rate |
|---|---|
| $0 – $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% |
States with No Lottery Tax
Eight states do not tax lottery winnings. If you live in one of these, you only pay federal tax.
Delaware and Pennsylvania also exempt their own state lottery winnings (but tax other state lottery prizes).
Lump Sum vs Annuity: Which Should You Take?
The biggest financial decision after winning a Powerball or Mega Millions jackpot. The lump sum is the cash value — typically 50% to 60% of the advertised jackpot. The annuity pays the full advertised amount, but spread over 30 years as 29 yearly graduated payments plus one immediate payment.
Most lottery winners take the lump sum (about 95% of jackpot winners do). The math favors lump sum when invested wisely — historical S&P 500 returns average 8-10% per year, beating the annuity's implied 4-5% growth rate. The annuity only wins if you would otherwise blow the cash quickly. It also continues to your estate if you die, but at the cost of giving up flexibility.
How federal tax works on lottery winnings
The IRS automatically withholds 24% federally on any lottery prize over $5,000. That's only the down payment though — lottery winnings count as ordinary income. A jackpot puts you straight into the top federal bracket of 37%, so you owe the difference at tax time. On a $100 million lump sum, the IRS keeps roughly $24M up front and you owe another $13M when you file.
State taxes vary by where you live, not where you bought the ticket
Most states tax lottery winnings, but not all. New York hits hardest at 10.9%. New Jersey is 10.75%. Maryland is 8.95%. California, Florida, Texas, Washington, Tennessee, South Dakota, New Hampshire, and Wyoming charge zero state tax on lottery prizes. If you bought your winning ticket in one state but live in another, your home state's tax usually applies — though some non-resident states also withhold first.
Hidden costs nobody mentions
- Estate tax: If you take the annuity and die early, remaining payments may face estate tax even though you never received them.
- Local/city tax: NYC adds 3.876% on top of state tax. Yonkers adds 1.477%.
- Gift tax: Sharing your win with friends or family can trigger gift tax over $19,000 per recipient per year (2026 limit).
- Investment income tax: The interest, dividends, and capital gains you earn on your winnings get taxed every year going forward.
Lottery tax questions
How much tax do you pay on a $1 million lottery win?
On a $1 million lottery prize, the IRS withholds 24% federally ($240,000), but your actual federal tax can climb to 37% in the top bracket. State tax adds 0% to 10.9% depending on where you live. After federal and state taxes, you typically take home $580,000 to $760,000 from a $1 million prize.
Should I take the lump sum or annuity for a lottery jackpot?
The lump sum is roughly 50-60% of the advertised jackpot but you get it all at once. The annuity pays the full advertised amount over 30 years (29 graduated payments + an initial one). Most financial advisors recommend the lump sum if you can reasonably invest it at over 5% return per year. The annuity is better if you worry about overspending or want guaranteed income.
Which states do not tax lottery winnings?
Eight states have no state income tax on lottery winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Delaware and Pennsylvania exempt state lottery winnings only.
What is the federal tax rate on lottery winnings?
The IRS automatically withholds 24% on prizes over $5,000. But lottery winnings are taxed as ordinary income, so the actual rate can reach 37% if your income lands you in the top bracket. You owe the difference at tax time.
Are lottery winnings taxed twice?
No, but they are taxed at multiple levels: federal income tax, state income tax (in most states), and sometimes local/city tax. Yonkers and New York City both tax winnings on top of New York State tax.