The credit for taxes paid to another state on a lottery prize
Your home state can subtract what the selling state took, but never more than its own tax on the prize. On $2,500,000, that limit decides most of the bill.
- Example prize
- $2,500,000
- New York form
- IT-112-R
- Pennsylvania form
- Schedule G-L
- Virginia credit on lottery winnings
- none
State and local tax, ticket bought in New Jersey
$243,965
Bought at home in New York: $243,965. Difference: $0.
| Prize this year | $2,500,000 |
| Federal income tax (top rate reached 37 %) | $892,180 |
| New Jersey tax as a nonresident | $236,595 |
| New York tax before credit | $243,965 |
| Credit for the New Jersey tax | -$236,595 |
| Withheld when the prize is paid | $725,000 |
| Still to pay with the return | $411,145 |
| After all taxes | $1,363,855 |
New Jersey taxes nonresidents on prizes of its lottery over $10,000. New York credits the tax paid to New Jersey, up to its own tax on the prize.
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
Almost every state with an income tax lets a resident subtract the income tax paid to another state on the same prize, and almost every one caps the credit at the lower of two amounts: the tax actually paid to the other state, and the home state's own tax on that income. The credit never refunds the difference. On a $2,500,000 prize for a single filer, a New Yorker with a New Jersey ticket pays New Jersey $236,595, New York credits $236,595 and still collects $7,370. A Pennsylvanian with the same ticket gets a credit of only $76,750, because Pennsylvania's flat 3.07 % sets the ceiling, so $159,845 of New Jersey tax is simply a cost. Virginia gives no credit at all on lottery winnings, and California, Oregon, Indiana and Arizona send some of their residents to the other state's nonresident return instead, the reverse credit.
Your credit, from your two states
State and local tax, ticket bought in New Jersey
$243,965
| Prize this year | $2,500,000 |
| Federal income tax (top rate reached 37 %) | $892,180 |
| New Jersey tax as a nonresident | $236,595 |
| New York tax before credit | $243,965 |
The lower of two taxes
The credit exists so that one prize is not taxed in full twice. The state that sold the ticket has the first claim, because the prize has its source there; the home state taxes residents on all income, so it steps back by crediting the first tax. The cap is the part people miss. New York's Form IT-112-R allows the lesser of the tax imposed by the other state and the New York tax attributable to the income taxed twice (Instructions for Form IT-112-R). New Jersey's Schedule NJ-COJ uses the same two-sided test (NJ-1040 instructions). Pennsylvania caps its Schedule G-L credit at 3.07 % of the income the other state taxed (Schedule G-L).
The consequence is simple: when two states tax one prize, you end up paying roughly the higher of the two state taxes. When the home state is the expensive one, it collects the gap. When the selling state is the expensive one, its extra tax stays with it and no form gives it back.
| Home state, ticket from | Paid to the selling state | Home tax before credit | Credit | Home tax after credit |
|---|---|---|---|---|
| New York, New Jersey | $236,595 | $243,965 | $236,595 | $7,370 |
| Pennsylvania, New Jersey | $236,595 | $76,750 | $76,750 | $0 |
| Ohio, Pennsylvania | $76,750 | $68,750 | $68,050 | $700 |
| Maryland (Montgomery County), Virginia | $142,955 | $156,929 | $142,955 | $13,974 |
| Virginia, Maryland | $212,077 | $143,750 | $0 | $143,750 |
Ohio is a low-rate state too, at 2.75 % at the top, so its IT RC credit stops at its own tax and the Pennsylvania tax beyond it is not recovered. Maryland shows the opposite end: its Form 502CR splits the credit between the state tax and the county tax, and what the state tax cannot absorb goes against the county tax (Maryland Form 502CR). In the example, the Montgomery County resident with a Virginia ticket keeps $1,370,891, against $1,370,891 on a Maryland ticket: the credit leaves the total where a home ticket would have put it.
The form, state by state
| Home state | Credit form named in the official instructions |
|---|---|
| New York | IT-112-R (Resident credit) |
| New Jersey | Schedule NJ-COJ |
| Pennsylvania | PA-40 Schedule G-L (Resident Credit for Taxes Paid) |
| Maryland | Form 502CR, Part A (attach copy of other state's return; see Administrative Release 42) |
| California | Schedule S (Form 540/540NR) |
| Illinois | Schedule CR (IL-1040) |
| Ohio | IT RC (Ohio Resident Credit), IT 1040 line 39 |
| Massachusetts | Form 1 credit worksheet / Schedule OJC (Income Tax Due to Other Jurisdictions), 2025 |
| Connecticut | Form CT-1040, Schedule 2 |
| Wisconsin | Schedule OS (Credit for Net Tax Paid to Another State) |
| North Carolina | Form D-400TC Part 1 (line 7a) |
| Minnesota | Schedule M1CR, Credit for Income Tax Paid to Another State |
| Vermont | Schedule IN-117 (Credit for Income Tax Paid to Other State or Canadian Province) |
| Kansas | K-40 line 13, Worksheet for Residents |
Most of these forms ask for a copy of the return filed in the other state, and several compute the credit separately for each state. The tax that counts is the tax shown on that nonresident return, not the amount the lottery withheld: withholding is a prepayment that the other state settles on its own return. For a handful of states the official pages read for this site do not name the form or do not quote the limit: Arizona, Colorado, Idaho, Montana and West Virginia among them. The calculator applies the same lower-of-two rule to them.
The reverse credit
A few pairs of states swap roles. California's Schedule S denies its residents a credit for tax paid to Arizona, Oregon, Virginia, because those states credit the California tax on their nonresident returns instead (FTB, Schedule S instructions). Oregon sends its residents to the other state's return when the income was taxed by Arizona, California, Indiana, Virginia (Oregon Publication OR-17). Indiana lists Arizona, Oregon, District of Columbia as its reverse-credit states, and Arizona's statute denies the credit whenever the other state already gives Arizona residents one, which covers California, Indiana, Oregon, Virginia.
In practice the home state keeps its full tax and the selling state gives up its own. A Californian with an Oregon ticket of $2,500,000 pays California $309,133 and claims back the Oregon withholding on the Oregon nonresident return, since Oregon credits the California tax. Indiana and Oregon each list the other, a loop the two booklets do not resolve; the calculator follows the home state's instructions.
When there is no credit
Virginia limits its credit to tax on earned or business income and capital gains, and its 2025 instructions name lottery and gambling winnings as income that does not qualify (Virginia Form 760 instructions). A Virginia resident with a Maryland ticket pays both states in full: $212,077 to Maryland and $143,750 to Virginia on the example. States with no income tax have no credit either, but they also have no tax to reduce. Tickets bought in another state runs more pairs; Virginia lottery tax covers the Virginia case in detail.
These figures are estimates built from the 2026 rates and the instructions cited, not tax advice for a specific return. Gambling is entertainment with a cost; free help is available at 1-800-MY-RESET.