Lottery Tax Calculator (2024)

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:

• Federal lottery tax calculator;
• Lottery annuity tax calculator; and
• Lottery lump sum tax calculator.

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.

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 52 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.

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 52 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.

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).

To find lump sum lottery winnings after taxes:

1. Check how much the lump sum payout differs from the advertised lottery prize (around 52 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.

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.

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.

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