State Lottery Tax Rates Ranked: Best to Worst (2026)

What This Article Calculates and Why Your State Matters

If you won a $10 million Powerball or Mega Millions jackpot tonight, your take-home amount would not be determined by luck alone — it would be determined largely by your zip code. A winner in Florida and a winner in New York start with the exact same jackpot but end up with a difference of more than $620,000 in their pocket after state taxes alone. That gap is real money. This article gives you the exact dollar figures on a $10 million jackpot, walking through every layer of tax from the lottery office to the IRS to your state revenue department. We have the state lottery tax rates ranked from best to worst so you can see precisely what winning actually means depending on where you live.

For a personalized calculation on any jackpot size, use our lottery tax calculator to run your own numbers instantly.

How a $10M Jackpot Actually Works — Advertised vs. Real

The $10,000,000 figure on the jackpot board is the annuity value — the total you would receive if paid out over roughly 29 years in graduated annual installments. Almost no winner takes the annuity. The overwhelming majority choose the lump sum cash option, which is approximately 60% of the advertised jackpot.

On a $10 million advertised jackpot, the lump sum cash value is approximately $5,700,000. That is your starting number before a single dollar of tax is applied. Everything calculated in this article begins from that $5.7 million figure. The advertised $10 million is real only if you accept 29 years of payments, and even then taxes still apply to each annual payment.

Lump Sum vs. Annuity — The $10 Million Dollar Breakdown

Taking the Lump Sum

Lump sum cash value on a $10M jackpot: approximately $5,700,000. From this amount, federal taxes hit first. After federal taxes at the effective top rate of 37%, you lose roughly $2,109,000 to the IRS. In a no-tax state like Florida, your final take-home on the lump sum is approximately $3,591,000. In a high-tax state like New York at 10.9%, you lose an additional $621,300 to the state, leaving you with approximately $2,969,700.

Taking the Annuity

With the annuity, you receive the full $10,000,000 over 29 years, but each payment is taxed as ordinary income in the year it is received. Early payments are smaller — roughly $200,000 to $250,000 in the first year — and grow annually. Each payment still lands in the top federal bracket for most winners, so the tax math is similar on a percentage basis. The annuity gives you more total dollars before tax but removes your ability to invest the full lump sum. This article focuses on lump sum calculations, which is the choice the vast majority of jackpot winners make.

Federal Taxes First — What the IRS Takes Before Your State

Federal taxation on lottery winnings works in two stages. Stage one happens immediately: the lottery withholds 24% of your prize at the time of payment. On a $5,700,000 lump sum, that immediate withholding equals $1,368,000. You receive a check for $4,332,000 at the lottery office.

Stage two happens at tax filing. Because a $5.7 million windfall puts you firmly in the top federal income tax bracket — 37% for single filers on income above $626,350 — you owe the difference between 24% withheld and 37% owed when you file your return. That additional amount is approximately $741,000, bringing your total federal tax bill to roughly $2,109,000.

Net lump sum after federal taxes only: approximately $3,591,000. Your state then takes its cut from this remaining amount based on where you live.

The difference between winning in New York versus Florida on a $10 million jackpot is more than $620,000 — enough to buy a house in most American cities.

State Lottery Tax Rates Ranked Best to Worst with Dollar Examples

Below is how the states stack up when you apply their lottery tax rate to the $5,700,000 lump sum. State taxes are calculated on the gross lump sum, not the post-federal amount, in most jurisdictions. Dollar figures shown represent the state tax dollar cost to the winner.

1. Florida, Texas, California, Washington, Wyoming, South Dakota, Tennessee, New Hampshire — 0% state tax — $0 lost to state
2. Pennsylvania — 0% on lottery winnings (state exempts lottery prizes) — $0 lost to state
3. Indiana — 3.23% — approximately $184,110 lost to state
4. Colorado — 4.4% — approximately $250,800 lost to state
5. Arizona — 4.5% — approximately $256,500 lost to state
6. Illinois — 4.95% — approximately $282,150 lost to state
7. Michigan — 4.25% — approximately $242,250 lost to state
8. Georgia — 5.49% — approximately $312,930 lost to state
9. Virginia — 5.75% — approximately $327,750 lost to state
10. Ohio — 3.99% — approximately $227,430 lost to state
11. Massachusetts — 5.0% — approximately $285,000 lost to state
12. Minnesota — 9.85% — approximately $561,450 lost to state
13. Oregon — 9.9% — approximately $564,300 lost to state
14. New Jersey — 10.75% — approximately $612,750 lost to state
15. New York — 10.9% — approximately $621,300 lost to state

Rates reflect 2026 state income tax schedules applied to lottery prize income. Some states apply withholding at different rates than the final tax liability; the figures above represent estimated final state tax due.

Comparison Table — Exact Take-Home by State on a $10M Win

All figures assume: $10M advertised jackpot, $5.7M lump sum, single filer, $2,109,000 federal tax, leaving $3,591,000 before state tax.

The No-Tax States — What Winners Actually Keep

Nine jurisdictions collect zero state tax on lottery winnings. Eight of them have no state income tax at all: Florida, Texas, Washington, Wyoming, South Dakota, Tennessee, New Hampshire, and Nevada. California is a special case — it has a high state income tax on most income but specifically exempts lottery winnings from state taxation. Pennsylvania similarly exempts lottery prize money from its state income tax despite taxing other income.

A winner in any of these states walks away with the full post-federal amount: $3,591,000 on a $10 million jackpot lump sum. That is the ceiling — the best possible outcome after taxes on this jackpot size. For state-specific details, visit all state lottery guides to see the rules that apply where you live.

Worst States to Win In — Where Taxes Hit Hardest

Four states stand out as the most expensive places to win a large lottery prize. New York at 10.9% is the worst in the country for lottery winners, costing a $10M lump sum winner $621,300 in state taxes alone and delivering a final take-home of only $2,969,700. New York City residents face an additional city income tax that can push the combined state-plus-city burden above 13%, potentially cutting another $100,000-plus from the take-home figure on top of the state number shown here.

New Jersey at 10.75% is nearly as bad, costing winners $612,750 on the same jackpot for a take-home of $2,978,250. Oregon at 9.9% costs $564,300 and Minnesota at 9.85% costs $561,450. The gap between winning in New York versus winning in Florida on this jackpot is $621,300 — money that goes to the state government rather than the winner, simply because of geography.

Use Our Tax Calculator to Run Your Own Numbers

The figures in this article use a $10 million jackpot as the baseline, but jackpots change every draw. The latest Powerball drawing on October 19, 2026 produced numbers 8, 31, 32, 42, and 48 with Powerball 23. The latest Mega Millions drawing on October 20, 2026 produced 13, 28, 33, 35, and 48 with Mega Ball 3. Both jackpots reset and grow with each rollover, meaning the lump sum cash value and the resulting tax dollar amounts shift constantly.

To calculate the exact take-home on whatever the current jackpot is — in your specific state, with your specific filing status — use our lottery tax calculator. Enter the advertised jackpot, select lump sum or annuity, choose your state, and get the precise after-tax figure in seconds. It applies current federal brackets and state-specific lottery tax rates so the number you see reflects what you would actually receive, not what the billboard says.

Important Tax Disclaimer

All tax figures in this article are for educational purposes only and are based on 2026 federal and state tax rate schedules as understood at the time of publication. Individual tax situations vary based on filing status, deductions, other income sources, residency rules, and changes in law. Lottery drawings are entirely random events, and nothing in this article affects or improves the odds of winning. Readers who win a lottery prize of any significant size should consult a qualified tax advisor and financial professional before making any decisions about claiming their prize or selecting a payment option.