The other eight states on the list don't have blanket income tax laws at all. Lottery winnings in those two states aren't subject to California's 12.3% income tax rate or Delaware's 6.6% rate. In most of the U.S., lottery winnings are taxed like regular income - but that's not the case in California and Delaware. In these 10 states, you won't owe any state taxes on lottery winnings at all: Tax laws regarding income and lottery winnings vary from state to state, meaning the overall tax bill on your big lottery jackpot could be even higher depending on where you buy the winning ticket.
The winner will also owe more when it's time to pay their annual taxes, since the top federal marginal tax rate is 37%.īut that's not all. If the current Mega Millions jackpot winner elects to take the roughly $780.5 million cash option - as opposed to receiving payments in an annuity over 30 years - they'll automatically get a federal tax bill of roughly $187.3 million. Lottery winnings come with a mandatory 24% federal tax withholding. Those wins are invariably followed close behind by a hefty tax bill.
