Illinois lottery tax: one rate for everyone, and no room for losses
Illinois taxes lottery winnings at its flat 4.95 %, residents and nonresidents alike, and starts withholding at a prize of $1,000, far below the federal line.
- Illinois rate
- 4.95 %
- State withholding from
- $1,000
- Gambling losses
- Not deductible
- Credit form
- Schedule CR
Owed with the return on top of withholding
$360
Federal withholding is 24 % of a prize over $5,000; the federal tax actually due on this prize is $360 (12 %).
| Federal tax due | $360 |
| Federal withholding | $0 |
| State and city tax due | $149 |
| State withholding | $149 |
| Total withheld | $149 |
| Total tax | $509 |
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
Illinois applies the same flat 4.95 % to a lottery prize as to a salary, so the state share of a prize is easy to predict: $1,000,000 costs about $49,500 in Illinois tax, a little less once the personal exemption is counted. The Illinois Lottery withholds that rate on every single payment of $1,000 or more, for residents and nonresidents, long before the federal withholding of 24 % starts above $5,000. A nonresident who buys the winning ticket in Illinois reports it on Schedule NR, even when the home state has a wage reciprocity agreement with Illinois. Residents who win in another state report the prize too and claim Schedule CR for the other state's tax. The sharpest Illinois rule concerns losses: the Department of Revenue allows no deduction for gambling losses at all, so a gambler who ends the year with $10,000 net pays Illinois on all $40,000 won.
Illinois withholding against the tax owed
Owed with the return on top of withholding
$360
| Federal tax due | $360 |
| Federal withholding | $0 |
| State and city tax due | $149 |
| State withholding | $149 |
A rate without brackets
Illinois has one individual income tax rate, 4.95 % (Illinois Department of Revenue, income tax rates). There is no top bracket for a jackpot to fall into and no standard deduction; the only allowance is the personal exemption of $2,925 per person in 2026, which the Department withdraws above a federal income limit. For a lottery winner this makes Illinois one of the few states where the state share hardly depends on the size of the prize or on filing status. The federal share does depend on both, which is why the federal column moves so much more in the examples below.
Withholding starts at $1,000
Publication 130 sets the Illinois withholding rule for the lottery: each single payment of Illinois Lottery winnings of $1,000 or more is withheld at the full 4.95 % rate, whether the winner lives in Illinois or not (IDOR Publication 130). Casino and sports wagering winnings follow a different trigger: Illinois withholds on them when they are subject to federal withholding, which means above $5,000. The winner fills in Form IL-5754 when the prize is shared.
The low threshold means many mid-size prizes are withheld for the state but not for the IRS. A resident who wins $3,000 gets $149 held back for Illinois and nothing for the federal government, yet still owes $360 of federal tax on the return. Withholding against the tax due explains how to close that gap.
Three Illinois winners
| Situation | Illinois tax | Federal tax | Kept |
|---|---|---|---|
| Single, prize of $3,000 | $149 | $360 | $2,492 |
| Married couple, prize of $1,000,000, other income $95,000 | $49,500 | $308,361 | $642,140 |
| Single, Powerball cash value (October 21, 2026) | $13,241,250 | $98,942,180 | $155,316,570 |
On the Powerball cash value of $267.5 million, the Illinois line is almost exactly 4.95 % of the prize, while the federal line is close to the top federal rate.
Tickets bought by Hoosiers, Badgers and Missourians
Gary, Kenosha and the Metro East sit on the state line, and Chicago draws buyers from three states. Illinois source income includes Illinois Lottery prizes and Illinois gambling and sports wagering winnings, and the 2025 Schedule NR instructions tell nonresidents to enter them in the Illinois column even if they live in a reciprocal state (Schedule NR instructions). Illinois has wage reciprocity with a few neighbors, but that agreement covers compensation, not prizes. Under 35 ILCS 5/303(e), prizes awarded under the Illinois Lottery Law are allocated to Illinois for anyone who is not a resident (35 ILCS 5/303, Wayback copy).
| Winner | Illinois tax | Home state tax after its credit | Kept |
|---|---|---|---|
| Indiana resident, Illinois ticket | $49,363 | $0 | $613,456 |
| Wisconsin resident, Illinois ticket | $49,363 | $20,324 | $593,133 |
| Missouri resident, Illinois ticket | $49,363 | $714 | $612,742 |
| Florida resident, Illinois ticket | $49,363 | $0 | $613,456 |
| Illinois resident, Indiana ticket | $29,500 | $20,000 | $613,320 |
For the Indiana, Wisconsin and Missouri buyers, Illinois takes its 4.95 % first and the home state credits it against its own tax on the prize. Indiana's own tax on the prize is lower than the Illinois tax, so nothing is left to pay at home; Wisconsin and Missouri tax more and collect the difference. A Florida resident has no home tax to offset, so the Illinois tax is the whole state bill. Nonresident lottery tax lists the other states that tax visitors.
Schedule CR for prizes won outside Illinois
An Illinois resident who wins in Indiana or Iowa reports the prize on the IL-1040 like any other income. Schedule CR then credits the income tax paid to the other state on income that is also in Illinois base income; the 2025 instructions place other states' gambling, sports wagering and lottery winnings in a dedicated line, and the credit is computed in proportion to the Illinois tax (Schedule CR instructions). Because the Illinois rate is low, the credit is often the full Illinois tax on the prize, and a winner in a state with a higher rate ends up with nothing left to pay Illinois. Credits between states covers the general rule.
No deduction for gambling losses
The Department's answer is short: Illinois does not allow a deduction for gambling losses (IDOR, income not allowed as a subtraction). Federal law lets an itemizer deduct losses up to 90 % of them from 2026, but Illinois starts from federal adjusted gross income, where those losses never appear. A gambler with $40,000 of winnings and $30,000 of losses is taxed by Illinois on the full $40,000; the example owes $1,980 to Illinois and $2,020 to the IRS. A bill to change that, HB3324, was filed in the 104th General Assembly and has not been enacted (HB3324 bill status). The federal loss limit explains the other side. Losses can grow faster than any tax; 1-800-MY-RESET answers around the clock.
Installments after leaving the state
Section 303(e) allocates Illinois Lottery prizes to Illinois for every person other than a resident, with no condition on where the winner lived when the prize was won. The text does not mention installments expressly; on its terms, annuity payments received after a move remain Illinois income. The figures on this page are estimates on the 2026 rules, not tax advice.