Before you see a dollar of lottery winnings, the IRS will take 25%. Up to an additional 13% could be withheld in state and local taxes, depending on where you live. Still, you’ll probably owe more when taxes are due, since the top federal tax rate is 37%. Your gambling winnings are generally subject to a flat 24% tax. However, for the following sources listed below, gambling winnings over $5,000 will be subject to income tax withholding: Any sweepstakes, lottery, or wagering pool (this can include payments made to the winner(s) of poker tournaments). Payouts vary considerably across the country, ranging from the lowest in New York at $230,240,220 for the current lump sum to a high of $260,925,000 in states either forgoing an individual income tax or exempting state lottery winnings. Michigan has a flat income tax rate of 4.25%. Applying that rate to the $776.6 million lump-sum payout results in a state tax bill of approximately $33 million. Depending on the number of your winnings, your federal tax rate could be as high as 37 percent as per the lottery tax calculation. State and local tax rates vary by location. Some states don’t impose an income tax while others withhold over 15 percent. The rest of the winnings are expected to be paid by the winner when filing the return. What is the tax rate for lottery winnings? For federal taxes, lottery winnings are taxed according to the federal tax brackets. Federal tax brackets are progressive, so portions of the winnings are taxed at different rates, and could be as high as 37%. State ... NC Lottery The game itself hasn't changed. All prizes, including the top prize of $1,000 A Day For Life, are taxed with the new tax rate of 24%. Even if your lottery winnings don’t boost your tax bracket, if the federal government withheld too much tax on your lottery winnings, you might get a refund at tax time. State and local tax. Each state has its own rules on taxing lottery winnings, so check both your state’s tax website and your city’s tax website for information. For ... A federal tax of 24 percent will be taken from all prizes above $5,000 (including the jackpot) before you receive your prize money. You may then be eligible for a refund or have to pay more tax when you file your returns, depending on your total income. If you win the jackpot you will be subject to the top federal tax rate of 37 percent. Lottery winnings of $600 or less are not reported to the IRS; winnings in excess of $5,000 are subject to a 25 percent federal withholding tax. When jackpot winners file their taxes, they find out if any of that amount gets refunded, or if they owe even more. Where you purchase your winning ticket matters due to state income and withholding taxes.
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