Updated: May 2026 · Data source: Current federal and state tax schedules
Where you live when you win makes a multi-million dollar difference.
Federal Taxes — Everyone Pays
24% withholding on prizes over $5,000. The 37% top marginal rate applies to large wins with the gap settled at tax time. Effective federal burden runs 35–37% on large jackpots. State taxes are the variable.
Best States — No Lottery Tax
| State | State Tax |
|---|---|
| Florida | 0% |
| Texas | 0% |
| Washington | 0% |
| Wyoming | 0% |
| South Dakota | 0% |
| Tennessee | 0% |
| New Hampshire | 0% |
Worst States
| State | State Tax |
|---|---|
| New York | ~10.9% |
| New York City (adds city tax) | + ~3.876% |
| New Jersey | ~10.75% |
| Oregon | ~9.9% |
| Minnesota | ~9.85% |
| Maryland | ~8.75% |
Real Numbers on a $500M Jackpot
Cash option ≈ $300M after federal taxes:
| Location | Take-home |
|---|---|
| Florida | ~$189,000,000 |
| Texas | ~$189,000,000 |
| New York City | ~$144,672,000 |
Difference between Florida and NYC: approximately $44 million on the same jackpot.
Can You Move to Avoid Taxes?
No — not retroactively. The relevant state is where you purchased the ticket and lived at the time of the win. New York aggressively audits winners who establish out-of-state residency after a win.
Florida Advantage
No state income tax plus strong in-state games. Florida Lotto (6/53) has jackpot odds of 1 in 22.9 million — far better than Powerball or Mega Millions. See the Florida Lotto strategy guide for more.
Key Takeaways
- Federal tax is unavoidable at 35–37%
- Florida and Texas have zero state lottery tax
- NYC is worst at 14%+ combined
- On a $500M jackpot state taxes can mean a $40–50M difference
- You cannot retroactively change residency
For entertainment purposes only. No system guarantees a lottery win. Must be 18+. Gamble responsibly.