Nonresident lottery tax: the selling state and its rules
34 lottery jurisdictions tax a winner who lives in another state, each from its own threshold. Here is the list, and what the claim withholds against what is owed.
- States taxing nonresident winners
- 34
- New York threshold
- $5,000
- New Jersey threshold
- $10,000
- Example prize
- $250,000
Refund expected
$5,619
Federal withholding is 24 % of a prize over $5,000; the federal tax actually due on this prize is $66,614 (26.6 %).
| Federal tax due | $66,614 |
| Federal withholding | $60,000 |
| State and city tax due | $15,016 |
| State withholding | $27,250 |
| Total withheld | $87,250 |
| Total tax | $81,631 |
New York taxes nonresidents on prizes of its lottery over $5,000. Pennsylvania 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
A state that sells lottery tickets can treat a prize of its lottery as income earned inside its borders, and most do: 34 of the 46 lottery jurisdictions in this dataset tax a nonresident winner. The threshold varies: New York counts a prize as New York income only above $5,000, New Jersey above $10,000, Connecticut, Oregon and Virginia from about $600, while the Massachusetts, Maryland and Georgia texts read here name no floor. California, Florida, the District of Columbia and the lottery states without an income tax take nothing from nonresidents. The lottery withholds at the claim under the selling state's rules, which is a prepayment, not the tax: on a $250,000 New York prize, a Pennsylvania resident is withheld $27,250 by New York but owes New York $15,016, and recovers the rest on a New York nonresident return. A Texan with a New Jersey ticket of the same size owes New Jersey $14,210.
Withheld at the claim against tax owed
Refund expected
$5,619
| Federal tax due | $66,614 |
| Federal withholding | $60,000 |
| State and city tax due | $15,016 |
| State withholding | $27,250 |
What makes a prize taxable to a nonresident
States tax nonresidents only on income with a source inside the state. For a lottery prize, the official texts tie the source to the state's own lottery, and for multistate games to the place where the ticket was sold. New York counts a Mega Millions or Powerball prize as New York income only if the winning ticket was bought in New York (Publication 140-W). Massachusetts covers multistate tickets bought in Massachusetts (Massachusetts gambling and lottery page), Wisconsin those bought from a Wisconsin retailer (Wisconsin Publication 600), and Pennsylvania prizes on tickets sold through a Pennsylvania vendor (Pennsylvania PIT guide). Where you live never changes this test; it decides only what your home state does next.
Several states add a floor. Below it, the prize is not income from that state at all for a nonresident, though the home state may still tax it.
The rule in every lottery state
| State | Taxes a nonresident winner | Threshold | Withholding on nonresidents | Withholding applies above |
|---|---|---|---|---|
| Arizona | not stated in the source read | 2.5 % | $5,000 | |
| Arkansas | not stated in the source read | not stated in the source read | ||
| California | no | none | ||
| Colorado | yes | none stated | 4 % | $5,000 |
| Connecticut | yes | $600 | 6.99 % | $600 |
| Delaware | yes | none stated | not stated in the source read | |
| District of Columbia | no | none | ||
| Florida | no | none | ||
| Georgia | yes | none stated | 4.99 % | $5,000 |
| Idaho | yes | $600 | 5.3 % | $5,000 |
| Illinois | yes | none stated | 4.95 % | $1,000 |
| Indiana | yes | none stated | not stated in the source read | |
| Iowa | yes | $1,000 | 3.8 % | $600 |
| Kansas | yes | none stated | 5 % | $5,000 |
| Kentucky | yes | none stated | 3.5 % | $5,000 |
| Louisiana | yes | $500 | 3 % | $5,000 |
| Maine | yes | none stated | 7.15 % | $5,000 |
| Maryland | yes | none stated | 8.75 % | $5,000 |
| Massachusetts | yes | none stated | 5 % | $600 |
| Michigan | yes | none stated | not stated in the source read | |
| Minnesota | yes | none stated | 7.25 % | $5,000 |
| Mississippi | not stated in the source read | not stated in the source read | ||
| Missouri | yes | $600 | 4 % | $600 |
| Montana | yes | none stated | 5.9 % | $5,000 |
| Nebraska | yes | none stated | 3.5 % | $5,000 |
| New Hampshire | no | none | ||
| New Jersey | yes | $10,000 | 5 % | $10,000 |
| New Mexico | yes | none stated | 6 % | $5,000 |
| New York | yes | $5,000 | 10.9 % | $5,000 |
| North Carolina | yes | none stated | 3.99 % | $600 |
| North Dakota | yes | none stated | 2.5 % | $5,000 |
| Ohio | yes | none stated | 2.75 % | not stated in the source read |
| Oklahoma | yes | none stated | not stated in the source read | |
| Oregon | yes | $600 | 8 % | $1,500 |
| Pennsylvania | yes | none stated | 3.07 % | $5,000 |
| Rhode Island | yes | none stated | not stated in the source read | |
| South Carolina | yes | none stated | 5.21 % | $500 |
| South Dakota | no | none | ||
| Tennessee | no | none | ||
| Texas | no | not stated in the source read | ||
| Vermont | yes | none stated | 6 % | $5,000 |
| Virginia | yes | $600 | 4 % | $5,000 |
| Washington | no | none | ||
| West Virginia | yes | none stated | 4.58 % | $5,000 |
| Wisconsin | yes | none stated | 7.65 % | $2,000 |
| Wyoming | no | none |
The table has gaps, and they are deliberate. For Arizona, Arkansas, Mississippi, no official text read for this site says whether a nonresident owes tax on a prize of that state's lottery; Arizona, for example, withholds on every prize it pays but its nonresident instructions never name lottery winnings. For several states the lottery's withholding rate is not published on the pages read. The calculator leaves those cells out rather than guess. Rhode Island, for one, does not publish the rate it withholds on a prize: its rule ties it to the federal amount withheld.
Withheld is not owed
The selling state's lottery withholds at the claim. New York applies its highest rate, 10.9 %, to every prize over $5,000, so on a $250,000 prize it holds $27,250. A nonresident's New York tax is computed on all income and then prorated to the New York share, which on this prize gives $15,016; the difference, $12,234, comes back on Form IT-203 (IT-203 instructions). The reverse also happens. New Jersey withholds 5 % above $10,000, $12,500 here, while the Texan's New Jersey tax is $14,210, so a balance is due with the New Jersey nonresident return (NJ-1040NR instructions).
| Winner lives in, ticket from | Withheld by the selling state | Selling state tax | Home state tax |
|---|---|---|---|
| Pennsylvania, New York | $27,250 | $15,016 | $0 |
| Texas, New Jersey | $12,500 | $14,210 | $0 |
| Washington, Oregon | $20,000 | $23,101 | $0 |
| New Hampshire, Massachusetts | $12,500 | $12,323 | $0 |
| Florida, Georgia | $12,475 | $11,871 | $0 |
Residents of states with no income tax feel the nonresident tax most, because nothing at home credits it. A Washington resident with an Oregon ticket pays Oregon $23,101; with a Washington ticket, the state tax would be zero. Residents of income-tax states usually recover it as a credit, up to their own tax; the credit for taxes paid to another state covers the limit.
Details that change the filing
Reciprocity agreements between neighboring states cover wages, not prizes. Ohio excludes lottery and gaming winnings from the filing exception it grants residents of Indiana, Kentucky, Michigan, Pennsylvania and West Virginia, so a Kentuckian with an Ohio prize files an Ohio nonresident return (Ohio IT 1040 instructions). Illinois asks nonresidents to report Illinois Lottery winnings even when they live in a reciprocal state (Illinois Schedule NR instructions). Connecticut taxes a nonresident only on reportable Connecticut lottery winnings, not on other Connecticut gambling (Connecticut DRS, IP 2015(23)). Indiana taxes a nonresident's Indiana lottery and casino winnings at the state rate but not at the county rate (Indiana IT-40PNR booklet).
Installments and later years
A nonresident who keeps an annuity is taxed on each payment by the selling state in the year it arrives. New York says so expressly: installments of a New York prize over $5,000 stay New York income even after the winner moves away. Moving after winning covers the other states that say the same.
All figures are estimates from the published 2026 rates and the official texts listed, not tax advice. Tickets bought in another state runs the full two-state calculation. If gambling is becoming a problem, free and confidential help is at 1-800-MY-RESET.