How much tax is paid when winning the lottery in the USA?

you need to understand how much is paid of taxes when winning the lottery in the USA if your dream is to be a happy winner. You must bear in mind that the Internal Revenue Service (IRS) will always seek its share and most likely the state government as well.

In lottery and chance games, millions of buyers lose but a few also win, if by chance you turn out to be a happy winner you will be more interested than ever to continue reading about how much is paid of taxes when winning the lottery in the USA applied by the federal government and state governments.

The BBC He narrates the experience of some in his article “how to win USD 1,500 million in lottery and be ruined”.

Federal government lottery tax rates (income tax)

You should know that you don’t have to report lottery winnings that are $600 or less, but if you win in lottery more than US$ 5,000, the federal government will apply a withholding tax of 24%.

Amazed! It is not all

If you earn US$500,000 dollars or more; or US$600,000 with your partner, the lottery tax rate immediately jump to 37%. Yes, over a third of your jackpot goes to Uncle Sam!

It’s not all bad news, in 2017 and before jackpot winners they should pay 39.8% to Uncle Sam. So it is still lower than the previous rate.

All thanks to changes in the law of taxes signed by President Donald Trump in 2017. As mentioned in Money.com and the lawyer site Garztmantaxlaw.com.

Lottery tax rates of some states

And that’s not all. The tax department of your state of residence will also be looking for their part.

Poor whoever wins New York lottery jackpot. You will be slapped with a tax rate of 8.82%.

ANDhe scenario is worse if you live in Westchester County, New York, as you must add another 3.88% to all income over $500,000.

California is another worst state to win the lottery, its lottery tax rate it is 13.38% as of 2018.

Oregon also makes this list of unfriendly states for jackpot winners, holding back 9.9%.

Not everything is bad, there are states that do not have state income taxes, such as Florida and Texas and will not tax your lottery winnings.

Other states are much friendlier about lottery winners such as New Hampshire and Tennessee, which, even when they charge state income tax, state lottery winnings will not be taxed.

Most states will not charge state taxes on non-residents about they lottery winnings, with the exception of Arizona and Maryland.

Now, if you live in Arizona, you will be taxed 5% on the prize, while non-residents will have to leave the state 6%.

So before spending all your lottery winnings, remember that part of that money belongs to Uncle Sam and another to the state government, so we recommend that you decide wisely where and how you play.

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