A lottery ticket bought in another state: who taxes the prize
A ticket from across a state line changes who withholds, who taxes and who gives a credit. Here are the rules on a $1,000,000 prize in 2026.
- Federal withholding
- 24 %
- New York nonresident threshold
- $5,000
- New Jersey nonresident threshold
- $10,000
- Example prize
- $1,000,000
State and local tax, ticket bought in New York
$79,201
Bought at home in New Jersey: $79,201. Difference: $0.
| Prize this year | $1,000,000 |
| Federal income tax (top rate reached 37 %) | $337,180 |
| New York tax as a nonresident | $66,033 |
| New Jersey tax before credit | $79,201 |
| Credit for the New York tax | -$66,033 |
| Withheld when the prize is paid | $349,000 |
| Still to pay with the return | $67,382 |
| After all taxes | $583,619 |
New York taxes nonresidents on prizes of its lottery over $5,000. New Jersey credits the tax paid to New York, 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
When a winning ticket was bought outside your home state, up to two states look at the prize. The state that sold it may tax you as a nonresident: New York does when the prize is over $5,000 and the multistate ticket was bought in New York, New Jersey above $10,000, while California and Florida tax no winner on their own lottery. Your home state then taxes all your income and usually credits the other state's tax up to its own. On a $1,000,000 prize for a single filer with $60,000 of other income, a New Jersey resident with a New York ticket pays New York $66,033 and New Jersey $13,168, $79,201 in all, exactly what a New Jersey ticket would have cost. A Texan with the same New York ticket pays New York $66,033 and nothing to Texas. A Virginia resident with a Maryland ticket pays $138,554, because Virginia gives no credit on lottery winnings. Federal tax, $337,180, does not change with the state.
Your ticket, your two states
State and local tax, ticket bought in New York
$79,201
| Prize this year | $1,000,000 |
| Federal income tax (top rate reached 37 %) | $337,180 |
| New York tax as a nonresident | $66,033 |
| New Jersey tax before credit | $79,201 |
Two questions, asked in this order
A prize won on a ticket from another state goes through two separate tests. The first belongs to the state that sold the ticket: does it treat a prize of its lottery as income from a source inside its borders, so that a nonresident owes it tax? The second belongs to your home state: does it tax its residents on lottery prizes from elsewhere, and does it credit the tax already paid? The federal return ignores both questions. The IRS taxes the prize the same way wherever the ticket came from, and the lottery withholds 24 % of a prize over $5,000 for it (IRS, Form W-2G instructions).
Powerball and Mega Millions make the question common, because the same draw is sold in dozens of jurisdictions and the state that sold the winning ticket pays the prize. For multistate games, several states tie their claim to the place of purchase. New York counts a multistate prize as New York income for a nonresident only when the winning ticket was bought in New York, and only above $5,000 (Publication 140-W). Massachusetts and Wisconsin use the same purchase test for multistate tickets.
The same prize in six cross-border cases
| Home state, ticket from | Tax to the selling state | Home tax after credit | State tax in all | Kept after all taxes |
|---|---|---|---|---|
| New Jersey, New York | $66,033 | $13,168 | $79,201 | $583,619 |
| Texas, New York | $66,033 | $0 | $66,033 | $596,786 |
| Pennsylvania, New York | $66,033 | $0 | $66,033 | $596,786 |
| Virginia, Maryland | $81,054 | $57,500 | $138,554 | $524,266 |
| New York, Florida | $0 | $66,920 | $66,920 | $595,899 |
| Connecticut, Massachusetts | $49,792 | $21,677 | $71,469 | $591,351 |
Read the lines in pairs. The New Jersey resident pays New York first; New Jersey then computes its own tax on the prize and subtracts the New York tax, up to the New Jersey tax on that income (NJ-1040 instructions). The total lands near the higher of the two state taxes, not their sum. The Texan has no home tax and no credit to claim, so the New York tax is simply the cost of the ticket's address. The Pennsylvania resident owes New York at its graduated rates; Pennsylvania's flat 3.07 % is smaller, so the Schedule G-L credit wipes out the Pennsylvania tax on the prize and New York's tax is what remains.
Where the credit fails: paying twice
The Virginia line is the trap. Maryland taxes a nonresident on Maryland lottery winnings and withholds 8.75 % from a nonresident's prize over $5,000 (Comptroller of Maryland, Tax Alert on gambling winnings). Virginia limits its credit to tax on earned or business income and capital gains, and its 2025 instructions list lottery and gambling winnings as income that does not qualify (Virginia Form 760 instructions). The prize is taxed in full by both states. The reverse case, a Marylander with a Virginia ticket, is different: Maryland's Form 502CR credits the Virginia tax.
A few states turn the credit around. California gives its residents no credit for tax paid to Arizona, Oregon or Virginia, because those states credit the California tax on their nonresident returns instead. Oregon does the same for Arizona, California, Indiana and Virginia. The credit for taxes paid to another state lists every form and limit.
When the selling state takes nothing
Some lotteries pay a nonresident with no state tax at all. Florida has no personal income tax and exempts lottery prizes by statute (Florida Statutes 24.122). California does not tax winnings from the California Lottery, including Powerball and Mega Millions, for anyone (Franchise Tax Board, gambling income). The District of Columbia withholds only from DC residents. In those cases the home state collects its whole tax: the New Yorker with a Florida ticket pays New York $66,920 and claims no credit, since there is nothing to credit. A ticket bought in a state with no tax on nonresidents never lowers the bill below what the home state charges; it only removes the second layer. Residents of the five states without a lottery face this every time they play.
For a few lotteries the official sources read for this site do not settle the nonresident question. Arizona withholds on every prize it pays, but no Arizona text read here says plainly whether a nonresident owes Arizona tax on an Arizona Lottery prize; Mississippi's lottery pages are silent too. The calculator applies no tax in those cases and says so in its card.
Withholding is a separate question
The selling state's lottery withholds under its own rules at the claim, whatever the final tax. New York withholds at its top rate on prizes over $5,000, residents and nonresidents alike. New Jersey withholds 5 % on prizes over $10,000. Those amounts are prepayments of the nonresident return you file with that state, where the real tax is computed; the home state never refunds another state's withholding. The nonresident lottery tax by state lists each threshold and rate.
Every number here is an estimate from the published 2026 rules and the official texts cited, not tax advice for a particular claim. The order of filing matters in practice: the nonresident return first, then the home return with the credit form and a copy of the other return. Playing across state lines should stay a small, budgeted expense; free, confidential help is at 1-800-MY-RESET.