Moving after winning the lottery: the annuity follows the ticket

Each payment is taxed by two states, looked at separately

A lottery annuity is not a single event. Each payment, $9,557,661 at the start on the $635 million example and 5 % larger every year after, is income in the year it arrives. In that year two states may look at it. The state of residence taxes all the income of its residents, wherever it comes from, so a winner who moves sheds the old home state's resident tax and picks up the new one's. The state that sold the ticket taxes nonresidents only on income it treats as coming from its territory, and here the rules differ more than most winners expect. The nonresident lottery tax covers the one-payment case.

States whose sources say the claim survives the move

The table lists every state for which an official text read for this site says, or clearly implies, that lottery installments stay taxable after the winner leaves. The last column says how firm the reading is. A state absent from the table is not a state that lets go: for most states, the official sources read say nothing either way about a winner who moves, and this site does not guess.

New York is the clearest case. Publication 140-W says that installment payments of a New York Lottery prize whose total proceeds exceed $5,000 remain New York source income for a nonresident, including a former resident (Publication 140-W). The threshold looks at the whole prize, not the yearly check. Ohio reaches the same result by statute, allocating every prize paid by the Ohio Lottery Commission to Ohio regardless of where the winner lives (Ohio Revised Code 5747.20). Illinois allocates prizes under its Lottery Law to Illinois for anyone who is not a resident (35 ILCS 5/303), and Michigan does the same for prizes under its lottery act (MCL 206.110). Massachusetts adds a letter ruling that treats the right to future annual payments as Massachusetts income of a nonresident (Letter Ruling 95-10).

Pennsylvania, New Jersey and Georgia are read more cautiously. Their texts make a prize of their lottery taxable to a nonresident and, for Pennsylvania, tax an annuity when each payment is made (PA Personal Income Tax Guide), but none of them discusses a winner who moves. The calculator applies the nonresident rule to each payment, as it would to a lump sum.

States that let go, or never held on

California and the District of Columbia do not tax nonresidents on prizes of their own lottery, so a winner who leaves owes them nothing on later payments; California does not even tax its residents on California Lottery prizes. States without a personal income tax on the prize, such as Florida, Texas, Washington or Tennessee, have nothing to keep. Moving into one of them removes the resident layer, nothing more.

The New York and Ohio pairs show the point of this page. The move to Florida or Tennessee removes little or nothing from the state line, because the state that sold the ticket keeps taxing the payments as nonresident income at rates close to what a resident would pay. In the reverse direction, the Texan who moves to New York finds that New York taxes residents on prizes from any state, so each payment received as a New Yorker is fully taxed there, with no credit since Texas took nothing.

The year of the move and the small-prize trap

In the year a winner changes residence, most states split the year: income received while a resident is taxed as resident income, the rest under the nonresident rules. New York adds a rule for small prizes, with proceeds of $5,000 or less, won while a resident: the unpaid balance is accrued and taxed in the year of the move unless a bond is filed on Form IT-260, according to Publication 140-W. Large prizes are not accrued, because their installments remain New York income anyway.

A move does not change the federal tax, which follows the winner everywhere and taxes each payment at the brackets of its year. Lump sum or annuity compares the two choices, and the annuity calculator lists all 30 payments. These figures keep 2026 rates for all 30 years and are estimates, not tax advice for a given winner. If gambling has stopped being a pastime, free help is available at 1-800-MY-RESET.