Pennsylvania lottery tax in 2026: one flat rate, many borders
Pennsylvania used to leave its own lottery prizes alone. That ended with Act 84 of 2016: cash prizes of the PA Lottery are now taxed at the flat personal income tax rate, like prizes from any other state.
- Pennsylvania rate
- 3.07 %
- State withholding
- 3.07 % over $5,000
- Credit form
- Schedule G-L
- Local earned income tax on prizes
- none
State and local tax, ticket bought in New Jersey
$53,689
Bought at home in Pennsylvania: $23,025. Difference: $30,664.
| Prize this year | $750,000 |
| Federal income tax (top rate reached 37 %) | $249,080 |
| New Jersey tax as a nonresident | $53,689 |
| Pennsylvania tax before credit | $23,025 |
| Credit for the New Jersey tax | -$23,025 |
| Withheld when the prize is paid | $217,500 |
| Still to pay with the return | $85,269 |
| After all taxes | $447,231 |
New Jersey taxes nonresidents on prizes of its lottery over $10,000. Pennsylvania credits the tax paid to New Jersey, 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
Pennsylvania taxes lottery and gambling winnings as a separate class of income at its flat rate of 3.07 %, and since January 1, 2016 that includes cash prizes of the PA Lottery itself. A single Pittsburgh resident earning $85,000 who wins $750,000 on a Pennsylvania ticket owes Pennsylvania $23,025, which the lottery withholds at the claim along with 24 % federal, and keeps $477,895 after $249,080 of federal tax. Nonresidents owe the same 3.07 % on prizes redeemed in Pennsylvania, including Powerball and Mega Millions tickets bought from a Pennsylvania retailer, with no dollar threshold. A Pennsylvanian who wins on a ticket from New Jersey, New York or Ohio owes Pennsylvania too, and Schedule G-L credits the other state's tax only up to 3.07 % of the prize, so the higher rate of a neighbor is never refunded. Local earned income taxes do not reach lottery winnings.
A Pennsylvania prize after tax
Lump sum after all taxes
$477,895
| Prize this year | $750,000 |
| Federal income tax (top rate reached 37 %) | $249,080 |
| Pennsylvania tax | $23,025 |
| Withheld when the prize is paid | $203,025 |
From exempt to 3.07 %
Until 2016, Pennsylvania Lottery winnings sat outside the state income tax. Act 84 of 2016 changed that for cash prizes paid on or after January 1, 2016; noncash prizes of the PA Lottery remain excluded (PA Personal Income Tax Guide, gambling and lottery winnings). The rate is the state's single personal income tax rate, 3.07 % (PA Department of Revenue, tax rates), with no standard deduction and no personal exemption in front of it, so every dollar of a cash prize is taxed at the same rate.
The PA Lottery withholds that rate whenever federal withholding applies, which means on prizes over $5,000, for residents and nonresidents alike (PA Lottery Winners Guide). Because the rate is flat, the Pennsylvania withholding matches the Pennsylvania tax almost exactly; the balance due in April is a federal one, $69,080 in the example above.
A class of income with its own deduction
Pennsylvania does not tax income as one total; it taxes classes, and gambling and lottery winnings form one of them. Within that class, the cost of wagers and tickets of the same tax year can be subtracted from winnings of that year, if records back it up. Nothing else is deductible: no travel to the casino, no meals, and no PA Lottery tickets bought before 2016. A loss in the class cannot be set against wages or any other class. That is a narrower rule than the federal one, where from 2026 itemizers deduct 90 % of losses up to winnings (the federal loss rule).
Buyers from New Jersey, Ohio, New York and Florida
Pennsylvania counts as Pennsylvania-source any wager placed in the state, any game conducted there, and the redemption of a PA Lottery prize; a multistate ticket bought through a Pennsylvania vendor is a PA Lottery prize. The PIT Guide states no dollar threshold, so a nonresident owes 3.07 % from the first dollar of such a prize, and files a PA-40 as a nonresident.
| Winner lives in | Pennsylvania tax | Home state after credit | Total state tax | Kept |
|---|---|---|---|---|
| New Jersey | $23,025 | $33,460 | $56,485 | $444,435 |
| Ohio | $23,025 | $643 | $23,668 | $477,251 |
| New York | $23,025 | $27,111 | $50,136 | $450,784 |
| Florida | $23,025 | $0 | $23,025 | $477,895 |
For neighbors whose own rate is higher, the Pennsylvania tax is simply credited at home and the total does not change much. A Floridian pays Pennsylvania and nobody else.
Pennsylvanians with a ticket from another state
Here the flat rate works against the winner. Pennsylvania taxes residents on lottery prizes from every state, then credits the other state's tax on Schedule G-L, line by line for the gambling and lottery class, at the lesser of the tax paid to that state and 3.07 % of the income it taxed (Schedule G-L). The other state's return, or the W-2G where no return is allowed, must be attached or the credit is refused. Any tax above 3.07 % stays lost.
| Ticket bought in | Tax to that state | Pennsylvania after G-L | Kept | Change against a PA ticket |
|---|---|---|---|---|
| Pennsylvania | $0 | $23,025 | $477,895 | $0 |
| New Jersey | $53,689 | $0 | $447,231 | -$30,664 |
| New York | $49,027 | $0 | $451,893 | -$26,002 |
| Ohio | $19,982 | $3,043 | $477,895 | $0 |
A Philadelphia resident who crosses to Camden or a Pittsburgh resident who plays in Ohio can read the second column as the price of the trip: New Jersey and New York tax a prize of this size well above 3.07 %, and Pennsylvania's credit stops at its own rate. Ohio's rate is lower than Pennsylvania's, so Pennsylvania collects the difference. The credit for taxes paid to another state compares the caps.
Local taxes: the earned income tax and Philadelphia
The local earned income tax levied by municipalities and school districts under Act 32 does not apply: the annual local return lists lottery winnings among non-taxable income (DCED local EIT return). Philadelphia is the open question. Its School Income Tax, 3.74 % for tax year 2025 and payable by residents only, covers unearned income including "gambling gains" (City of Philadelphia, School Income Tax); the city page does not name lottery winnings and lists no 2026 rate, so the calculator leaves it out.
Annuity payments
The PIT Guide treats an annuity paid in cash as a cash prize taxed when actually paid, and the redemption of a PA Lottery prize as Pennsylvania-source for a nonresident; read together, installments paid to a winner who has moved away remain taxable by Pennsylvania. The Guide itself does not discuss a winner who moves, so that reading is an inference, not a quoted rule. Moving after winning the lottery lays out the cases.
Every figure here is an estimate on the 2026 rules, not tax advice; the Department of Revenue decides each return. Pennsylvania's problem gambling help line, like the national one, is reached at 1-800-MY-RESET.