Minnesota lottery tax: a prize through the 2026 brackets
Minnesota taxes lottery winnings as income at rates up to 9.85 %, and it taxes nonresidents on Minnesota State Lottery prizes.
- Top Minnesota rate
- 9.85 %
- Lottery withholding
- 7.25 %
- Top bracket, single
- over $203,150
- Top bracket, joint
- over $337,930
Lump sum after all taxes
$90,593,013
46.8 % of the prize goes to tax: $79,706,987. $53,218,750 is withheld at the claim, the rest is due with the 2026 return.
| Prize this year | $170,300,000 |
| Federal income tax (top rate reached 37 %) | $62,940,611 |
| Minnesota tax | $16,766,377 |
| Withheld when the prize is paid | $53,218,750 |
| Still to pay with the return | $26,488,237 |
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
On a $1,000,000 Minnesota State Lottery prize, a single Minnesotan with $60,000 of wages owes Minnesota $94,651 for 2026 and the IRS $337,180, and keeps $568,168. Most of the prize is taxed at 9.85 %, the rate that starts at $203,150 of taxable income for a single filer and $337,930 for a joint return in the indexed brackets the Department of Revenue published for 2026. Minnesota law sets the lottery's state withholding at 7.25 %, so $72,500 is held at the claim and the remaining $22,151 is due with Form M1. A Wisconsin, Iowa or North Dakota resident who wins on a ticket bought in Minnesota owes Minnesota as a nonresident, then claims a credit at home; the reciprocity agreements for wages do not cover lottery and gambling winnings.
A Minnesota prize after state and federal tax
Lump sum after all taxes
$568,168
| Prize this year | $1,000,000 |
| Federal income tax (top rate reached 37 %) | $337,180 |
| Minnesota tax | $94,651 |
| Withheld when the prize is paid | $312,500 |
How $1,000,000 climbs the Minnesota brackets
Minnesota indexes its brackets each year, and the 2026 figures were announced by the Department of Revenue in December 2025 (Minnesota Revenue, 2026 brackets and standard deduction). Four rates apply: 5.35 %, 6.8 %, 7.85 % and 9.85 %. A prize does not jump to the top rate on its first dollar; it fills the brackets that the winner's other income has left open. The table follows a $1,000,000 prize for a single filer whose wages, after the $15,300 standard deduction, already use part of the first bracket.
| Minnesota bracket | Rate | Part of the prize taxed there | Tax |
|---|---|---|---|
| from $0 | 5.35 % | $0 | $0 |
| from $33,310 | 6.8 % | $64,730 | $4,402 |
| from $109,430 | 7.85 % | $93,720 | $7,357 |
| from $203,150 | 9.85 % | $841,550 | $82,893 |
More than four fifths of the prize meets the top rate, which is why the Minnesota tax ends at 9.5 % of the prize. Minnesota's standard deduction also phases out at high income, which the figures here leave aside. Minnesota's separate tax on net investment income above a high threshold concerns interest, dividends and gains, not lottery prizes; it matters only later, when the invested prize starts to earn.
Withholding written into the statute
Unlike states that leave the rate to the lottery, Minnesota writes it into law: Minnesota Statutes section 290.92, subdivision 29, requires 7.25 % to be withheld from Minnesota State Lottery winnings that are subject to federal withholding, which in practice means prizes over $5,000 (Minn. Stat. 290.92, subd. 29). The statute draws no line between residents and nonresidents. 7.25 % is below the top rate, so a large winner always has a balance: on $1,000,000 it is $22,151 for Minnesota and $97,180 for the IRS. Withholding against the tax actually due runs the same gap for other states.
Hudson, Fargo, Sioux Falls: neighbors with Minnesota tickets
The Twin Cities draw buyers from western Wisconsin, Moorhead faces Fargo across the Red River, and the southwest corner is a short drive from Sioux Falls and northern Iowa. The Department of Revenue's gambling page is direct: nonresidents are taxed on gambling winnings from Minnesota, the Minnesota State Lottery included, and file Form M1 with Schedule M1NR when their Minnesota gross income meets the filing requirement (Minnesota Revenue, gambling winnings). The reciprocity agreements with Michigan and North Dakota cover wages only. The home state then taxes its resident and, where it has an income tax, credits the Minnesota tax up to its own.
| Winner lives in | Minnesota tax | Home state tax after credit | Federal | Kept |
|---|---|---|---|---|
| Minnesota (Minnesota ticket) | $94,651 | $0 | $337,180 | $568,168 |
| Wisconsin | $91,706 | $2,191 | $337,180 | $568,923 |
| North Dakota | $91,706 | $1,164 | $337,180 | $569,950 |
| Iowa | $91,706 | $0 | $337,180 | $571,114 |
Each of the three neighbors taxes at lower rates than Minnesota, so its credit absorbs all or nearly all of its own tax on the prize; what remains in the third column is the slice of home tax that the credit formula does not reach, and the winner pays close to the Minnesota amount in total. A South Dakota buyer has no state income tax at home and simply pays Minnesota. The pattern turns around for a Minnesotan who buys in Wisconsin: Wisconsin taxes the nonresident, Minnesota taxes its resident on gambling winnings from anywhere and grants Schedule M1CR, the credit for income tax paid to another state. On $1,000,000 that leaves $67,496 to Wisconsin and $27,155 to Minnesota. Tickets bought in another state explains the general rule.
A Mega Millions share for a Minnesota couple
For a larger example, take the cash value of the October 20, 2026 Mega Millions jackpot, $170.3 million, claimed by a married couple in Rochester with $140,000 of salaries. Minnesota's share is $16,769,097, the federal tax $62,959,911, and the couple keeps $90,570,993. At the claim the lottery holds $12,346,750 for Minnesota. Mega Millions after taxes compares the same jackpot across states.
Losses, and what the sources leave open
Gambling losses reduce Minnesota income only for a winner who itemizes on Schedule M1SA, and only up to the winnings reported federally; they are not allowed for the Minnesota alternative minimum tax. Losing lottery tickets kept with dates and amounts count like other wagers. Whether Minnesota follows the federal limit of losses to 90 % of their amount from 2026 is not stated in the official pages read for this site, and neither is the limitation formula of the M1CR credit, which the figures above approximate. Every number here is an estimate under the 2026 rules, not tax advice. Lottery play has a cost; the National Problem Gambling Helpline answers at 1-800-MY-RESET (NCPG).