Connecticut lottery tax: withheld at the top rate, almost always
The CT Lottery withholds 6.99 % for the state, the top Connecticut rate, from prizes as small as $600. On a jackpot, that is close to the real tax.
- State withholding
- 6.99 %
- Withheld from
- $600 if reportable
- Top rate
- 6.99 %
- Gambling losses
- not deductible
Owed with the return on top of withholding
$98,749
Federal withholding is 24 % of a prize over $5,000; the federal tax actually due on this prize is $337,180 (33.7 %).
| Federal tax due | $337,180 |
| Federal withholding | $240,000 |
| State and city tax due | $71,469 |
| State withholding | $69,900 |
| Total withheld | $309,900 |
| Total tax | $408,649 |
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
Connecticut withholds state income tax at 6.99 % on every gambling payment that is subject to federal withholding or reportable on Form W-2G, which for a lottery prize means $600 or more and at least 300 times the wager; the rule applies to residents and nonresidents alike. 6.99 % is the top Connecticut rate, reached above $500,000 of income for a single filer and $1,000,000 for a couple. On small prizes the withholding is therefore larger than the tax: a resident with a $3,000 prize has $210 held back for a state tax of $190. On large ones the two meet, because Connecticut recaptures the benefit of its lower brackets from high incomes: a single resident taking the $170.3 million Mega Millions cash value owes Connecticut $11,905,539. Nonresidents are taxed only on reportable Connecticut Lottery winnings, and losing tickets are never deductible on the Connecticut return.
Connecticut withholding against the tax due
Owed with the return on top of withholding
$340
| Federal tax due | $360 |
| Federal withholding | $0 |
| State and city tax due | $190 |
| State withholding | $210 |
The rule at the claim window
The Connecticut Lottery is required to withhold Connecticut income tax, currently 6.99 %, from all gambling winnings that are either subject to federal withholding, which means more than $5,000, or reportable for federal purposes (CT Lottery, Tax Information). A lottery prize is reportable when it reaches $600 and at least 300 times the wager, so a $1,000 instant ticket bought for a few dollars is caught. Residency makes no difference at the window. A winner who is not a US resident has 30 % federal plus the same 6.99 % state withheld.
Few states withhold at their top rate on prizes this small. For most Connecticut households a small prize is taxed at a lower bracket, and the difference comes back as a refund when the CT-1040 is filed. The table runs the comparison.
| Resident prize | CT withheld | CT tax due | Difference at filing |
|---|---|---|---|
| $3,000, single, $60,000 salary | $210 | $190 | -$20 |
| $400,000, married couple, $130,000 salaries | $27,960 | $27,460 | -$500 |
| $170.3 million Mega Millions cash value, single | $11,903,970 | $11,905,539 | $1,569 |
Seven brackets that fold into one
Connecticut's schedule runs from 2 % to 6.99 % in seven steps, unchanged for taxable years from 2024 and not indexed (General Statutes section 12-700). Section 12-700 then adds benefit recapture: as income rises, the 2 % bracket is phased into 4.5 %, and fixed add-on amounts take back the advantage of the middle brackets. For a single filer the add-ons begin at $105,000 of Connecticut AGI and for a couple at $210,000. A prize large enough to clear the last of them is taxed, in effect, at 6.99 % from the first dollar of income, which is why the jackpot line of the table shows almost no gap between withholding and tax.
Between the two extremes, a couple's $400,000 prize lands in the zone where recapture is still being applied. Their Connecticut tax on it, $27,460, is 6.9 % of the prize, more than any single bracket would suggest, because part of the recapture is triggered by the prize itself.
New York and Massachusetts on both sides of the line
For nonresidents Connecticut taxes only reportable Connecticut Lottery winnings, Powerball and Mega Millions tickets sold in Connecticut included, provided the winner meets the gross income filing test (DRS informational publication 2015(23)). Other gambling winnings of nonresidents, such as casino jackpots, are not taxed by Connecticut under the earlier publication on non-lottery winnings (IP 2011(27)).
| Situation | State of the ticket | Home state after credit | Kept |
|---|---|---|---|
| New York resident, Connecticut ticket | $69,853 | $887 | $592,080 |
| Massachusetts resident, Connecticut ticket | $69,853 | $208 | $592,759 |
| Connecticut resident, New York ticket | $66,033 | $5,436 | $591,351 |
| Connecticut resident, Massachusetts ticket | $49,792 | $21,677 | $591,351 |
A Connecticut resident who wins in another state claims the credit for tax paid to that state on Schedule 2 of Form CT-1040 and attaches the other state's nonresident return. The exact limitation formula was not part of the texts read for this page; the calculator caps the credit at the Connecticut tax on the prize, the usual rule. The credit for tax paid to another state shows how the cap works, and Massachusetts lottery tax covers the other side of the Massachusetts line.
Annuity winners who leave the state
A Connecticut resident who keeps a jackpot annuity is taxed on each payment in the year it arrives. What happens after a move out of state is less clear: no official Connecticut text read for this page says whether later installments of a Connecticut Lottery prize remain Connecticut income for a former resident. Until the Department of Revenue Services publishes a position, the treatment is settled case by case on the nonresident return, if one is required. Moving after winning lists the states that have settled the point.
No deduction for losing tickets
The Department of Revenue Services is blunt: gambling losses are not deductible for Connecticut income tax purposes, even when they are deducted on the federal return. A Connecticut resident who itemizes $5,000 of losing tickets against a $5,000 prize may owe little federal tax on it, yet Connecticut taxes the full prize. Since the federal deduction is limited to 90 % of losses from 2026, the federal and state results now differ in both directions.
The figures on this page are estimates on 2026 rules; they are not tax advice, and the personal exemption, which phases out at higher incomes, is not modeled. The DRS website could not be read directly, so the statute and archived DRS publications were used. Anyone who needs help with gambling can reach the National Problem Gambling Helpline at 1-800-MY-RESET (National Council on Problem Gambling).