All of it is income
Every gambling win is taxable income: lottery, raffle, casino, sports betting, a poker tournament. It goes on Schedule 1 of your Form 1040 at ordinary rates. There is no special lottery tax and no lower rate for a windfall. What confuses winners is the difference between the money the payer withholds and the tax that is ultimately due.
The 24% withholding
When the winnings minus the wager exceed $5,000 (from a lottery, sweepstakes, wagering pool, or any bet that pays at least 300 times the wager) the payer must withhold federal income tax at a flat 24% and report the payment on Form W-2G. If you decline to give a taxpayer identification number, backup withholding at the same 24% applies. Slot and bingo wins have their own reporting thresholds but no withholding requirement unless you ask for it.
Why you still owe in April
The 24% is a down payment, and whether it is too much or too little depends on your bracket. A $100,000 prize on top of a $50,000 salary puts a single filer's 2026 taxable income at $133,900; the prize is taxed at 12%, 22% and 24% (about $20,900 in all) while the payer withheld $24,000, so roughly $3,100 comes back as a refund. A $1 million prize on the same salary is taxed mostly at 35% and 37%: about $334,700 of tax against $240,000 withheld, leaving $94,700 due with the return. The calculator shows the difference either way and, when you owe, suggests an estimated payment so the underpayment penalty does not follow the tax bill.
A retiree in the 12% bracket who wins $10,000 has $2,400 withheld and owes about $1,200, and gets the rest back at filing.
Lump sum or annuity
A jackpot's advertised figure is usually the total of 30 annual payments; the cash option is smaller. Either way the tax is on what you receive: a lump sum is taxed in one year at the highest brackets, an annuity is taxed installment by installment, which spreads the income across lower brackets but means each payment is income in its own year at whatever rates then apply. Enter the year's installment to see the tax on it.
Losses, states and the things this tool does not know
Gambling losses are deductible only if you itemize, only up to the amount of your winnings (from 2026, only 90% of the losses count toward that), and only with records. The cost of the winning ticket is subtracted for the withholding test but the winnings are still reported in full. State treatment varies widely: some states tax winnings as ordinary income at their top rate, a few exempt their own lottery's prizes, and the nine states without an income tax take nothing. Enter the rate that applies to you. City taxes, non-resident withholding when you win in another state, and the tax on the prize's growth once invested are outside the calculator.
Official sources used on this page
- Instructions for Forms W-2G and 5754 (Rev. January 2026): 24% regular withholding, $5,000 threshold, 300-times rule: January 2026
- Topic 419, Gambling income and losses: 11-Jun-2026
- Rev. Proc. 2025-32 (2026 brackets and standard deduction): 2025-10-09
Every rule record names its source, revision and the date it was last verified; the results panel prints the ones your calculation used. Rules last verified 2 September 2026.