Lottery Tax Calculator

Created by Tibor Pal, PhD candidate
Reviewed by Dominik Czernia, PhD candidate and Jack Bowater
Based on research by
Cipra T. Financial and Insurance Formulas (2006)See 1 more source
taxfoundation.org
Last updated: Jun 30, 2022

The lottery tax calculator (or taxes on lottery winnings calculator) helps you estimate the tax amount deducted from a lottery prize and compare the money you would receive if you took either the lump sum cash option or a series of annuity payments.

Therefore you may employ our tool as a:

Read further, and we will show the difference between lump sum vs. annuity lottery from a tax perspective and explain how are lottery annuities taxed.

If you are interested in lottery annuity payments in the U.S., you may check our Powerball and Mega Millions payout calculators.

How much is lottery tax? Tax on lump sum vs. annuity lottery

While the same type of taxes are levied on lump sum and annuity payouts, the final amounts you may receive can diverge considerably. First of all, the lump sum payment is typically lower than the advertised lottery prize (usually by around 70 percent) and is subject to an automatic 24 percent federal withholding tax.

The remainder of the amount is also reduced by the additional Federal tax (up to 37 percent) depending on your filing status, lottery purchase, and place of residence.

In the case of lottery annuity payments, the same taxes are levied; however, they are paid annually and are always based on the actual tax rates of the given year.

How to use the after tax lottery calculator

There are only a couple of variables required to run the lottery annuity calculator:

  1. Annuity payout - Here you can input how much you've won or the amount of lottery prize you want to analyze. Note, that the annuity option pays the full amount of lottery winning.

  2. Lump sum to annuity rate - Set here the percentage of the annuity payment paid as a lump sum. The lump-sum payout is usually about 70 percent of the total lottery prize. This is the main difference between a lump sum vs. annuity lottery.

  3. Lump sum payout - You can manually set the lump sum lottery payment.

  4. Tax treatment:

    • Customized - Optional tax rates apply for the payment (tax rate I. and tax rate II.); and
    • U.S. Taxes - If you don't know how much lottery tax is, the tax is estimated according to your filing status (tax bracket) and the chosen state, where state tax may apply. Our lottery tax calculator by state allows you to choose personalized options.
  5. Annuity setup - available in the advanced mode:

    • Annuity term - The length of lottery annuity payout (30 years by default);
    • Annual growth rate (5 percent by default); and
    • Rate of return (zero by default).

After setting all parameters, you will immediately see the result for the lump-sum and lottery annuity payments with all details.

FAQ

What are the lump sum lottery winnings after taxes?

The federal tax on the lottery is determined by the federal marginal rates, which is 37 percent in the highest bracket. In practice, there is a 24 percent federal withholding of the gross prize, plus the remaining tax, based on your filing status.

For example, if your gross prize is $1,000,000, you need to pay $334,072 in total taxes ($240,000 federal withholding, plus the remaining $94,072 for single filing status in 2021).

How do I calculate lottery lump sum after taxes?

To find lump sum lottery winnings after taxes:

  1. Check how much the lump sum payout differs from the advertised lottery prize (around 70 percent in most cases).
  2. The gross amount is subject to a 24 percent federal withholding.
  3. Additional federal tax is imposed according to your filling status.
  4. In most cases, state taxes are also levied depending on where you bought the lottery and where you live.
  5. Use the lottery tax calculator by state for more precise results.

How much do I pay in taxes if I win 1,000,000?

If your gross prize for lump sum payout is $1,000,000, you need to pay $334,072 in total tax ($240,000 federal withholding, plus the remaining $94,072 for single filing status in 2021).

In addition, you need to pay state tax as well, depending on where you bought the lottery and where you live.

Do you pay taxes on lump sum lottery winnings?

Yes. Lump-sum lottery winnings are subject to federal taxation and, in most cases, state tax as well. The exceptions are Florida, New Hampshire, Tennessee, Texas, South Dakota, Washington, and Wyoming.

Lottery tax calculator disclaimer

You should consider this after tax lottery calculator as a model for financial approximation. All payment figures, balances, and tax figures are estimates based on the data you provided in the specifications that are, despite our best effort, not exhaustive.

Without claiming completeness, please also note the following:

  • The federal taxes approximated based on the 2021 marginal tax tables published by the IRS without taking account of possible deductions;
  • All state taxes are estimated with fixed-rate calculation applicable in 2021 (without the effect of filing status, the possible existence of graduated-rate brackets, or modification in rates);
  • Potential additional local taxes are not considered;
  • If you are not a U.S. resident, you will typically have a flat 30% federal withholding, and state taxes may differ from what is listed above.

For this reason, we created the calculator for instructional purposes only. Still, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice.

Tibor Pal, PhD candidate
Annuity payout
$
Lump sum to annuity rate
%
Lump sum payout
$
Tax treatment
US taxes
Federal filing status
Single
Where do you live?
Arizona
Results
Lump sum payoutAnnuity payoutDifference
Gross payout*$70,000,000$100,000,000$30,000,000
Federal tax$25,864,072$35,922,168$10,058,095
State tax$3,500,000$5,000,000$1,500,000
Net payout$40,635,928$59,077,833$18,441,905
* The gross payout for lump sum payment is approximated by 70% of the total lottery prize.
Annuity schedule
YearGross paymentFederal taxState taxNet payout
11,505,144520,97575,257908,911
21,580,401548,82179,020952,560
31,659,421578,05882,971998,392
41,742,392608,75787,1201,046,515
51,829,511640,99191,4761,097,044
61,920,987674,83796,0491,150,100
72,017,036710,376100,8521,205,809
82,117,888747,691105,8941,264,303
92,223,782786,872111,1891,325,722
102,334,972828,012116,7491,390,211
112,451,720871,209122,5861,457,925
122,574,306916,566128,7151,529,025
132,703,022964,190135,1511,603,680
142,838,1731,014,196141,9091,682,068
152,980,0811,066,702149,0041,764,375
163,129,0851,121,834156,4541,850,797
173,285,5401,179,722164,2771,941,541
183,449,8171,240,504172,4912,036,821
193,622,3071,304,326181,1152,136,866
203,803,4231,371,339190,1712,241,913
213,993,5941,441,702199,6802,352,212
224,193,2741,515,583209,6642,468,026
234,402,9371,593,159220,1472,589,631
244,623,0841,674,613231,1542,717,317
254,854,2381,760,140242,7122,851,386
265,096,9501,849,944254,8482,992,159
275,351,7981,944,237267,5903,139,970
285,619,3882,043,246280,9693,295,173
295,900,3572,147,204295,0183,458,135
306,195,3752,256,361309,7693,629,245
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