South Carolina lottery tax under the 2026 reform
From 2026 South Carolina taxes income in two brackets, and a lottery prize lands almost entirely in the upper one, at 5.21 %.
- Top rate 2026
- 5.21 %
- Upper bracket starts at
- $30,000
- Withholding starts above
- $500
- Local tax on prizes
- none
Annuity ahead after 29 years
$82,264,845
Lump sum after tax $98,449,190 today; annuity $239,657,292 after tax over 30 years. The two are equal at a return of 5.7 % a year.
| Lump sum after tax | $98,449,190 |
| Annuity, sum of 30 payments after tax | $239,657,292 |
| Tax on the lump sum | $71,850,810 |
| Tax on the annuity, 30 years | $173,342,707 |
| Lump sum invested at 4.0 % for 29 years | $307,028,709 |
| Annuity payments invested at 4.0 % | $389,293,554 |
Same 2026 brackets every year; a later tax change or a move to another state changes the annuity side.
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
South Carolina rewrote its income tax for 2026. Act 110 replaced the old three-rate schedule with two brackets: 1.99 % on the first $30,000 of taxable income and 5.21 % above, the same for every filing status. A single South Carolinian who wins $500,000 on an Education Lottery ticket owes the state about $26,050, pays $154,114 of federal tax and keeps $319,836. The new South Carolina deduction phases out completely at incomes far below a prize of this size, so a winner gets none of it. The lottery withholds state tax from prizes above $500, residents and nonresidents alike, at the maximum individual rate. State law forbids any county or city tax on a lottery prize. Georgia and North Carolina residents who buy across the line owe South Carolina as nonresidents.
A South Carolina prize after the 2026 rates
Lump sum after all taxes
$319,836
| Prize this year | $500,000 |
| Federal income tax (top rate reached 35 %) | $154,114 |
| South Carolina tax | $26,050 |
| Withheld when the prize is paid | $146,050 |
What Act 110 changed for a winner
The South Carolina Department of Revenue summarized the reform in Information Letter 26-20 (SCDOR Information Letter #26-20). For tax years beginning after 2025 the schedule has two brackets, 1.99 % up to $30,000 and 5.21 % above, indexed each year, with a possible further cut of the top rate from 2027 if revenue triggers are met. Taxable income now starts from federal adjusted gross income instead of federal taxable income, and a new South Carolina Income Adjusted Deduction replaces the federal standard deduction: up to $15,000 for a single filer and $30,000 for a married couple, reduced as income rises and gone entirely at moderate incomes.
For a lottery winner, two consequences follow. The prize itself is taxed at 5.21 % on nearly every dollar, since the lower bracket is used up by the first $30,000 of income. And the deduction is lost, because a prize lifts adjusted gross income far past the phase-out. The estimates on this page still subtract the full deduction; the real state tax of a single winner is higher by about $782, the deduction taxed at the top rate.
The lottery's withholding: a rule, not a printed rate
Two statutes govern the claim. Section 59-150-230 of the Education Lottery Act says lottery prizes are subject to state income tax and that residents and nonresidents who receive a prize above $500 are subject to mandatory state withholding (S.C. Code 59-150-230). Section 12-8-530 sets the withholding at a percentage equal to the maximum individual rate (S.C. Code 12-8-530). Under the 2026 schedule that maximum is 5.21 %, but the percentage the Education Lottery actually applies to 2026 claims was not confirmed on an official page for this site, so no withholding amount is shown here. If the lottery withholds at the top rate, the state balance due in April is small; the federal one is not, since 24 % is withheld on a prize taxed mostly at 37 %, a gap of $34,114 on the example.
No county or city tax, by statute
The same section 59-150-230 adds a protection that few states write down: no county, municipality or other political subdivision may impose a tax on the payment of a lottery prize. Columbia, Charleston or Greenville residents therefore pay the state and the IRS, nothing more. This also holds for prizes paid in installments.
Thirty Mega Millions payments in South Carolina
The October 20, 2026 Mega Millions jackpot was advertised at $413 million, with a cash value of $170.3 million. A single South Carolinian taking cash owes the state $8,872,630. A winner who keeps the annuity receives 30 payments, each 5 % larger than the last (Mega Millions, how to play), and each one meets the two brackets again in its own year. Since the top bracket starts so low, every payment is taxed at nearly 5.21 %, and the 30 payments carry $21,517,300 of South Carolina tax at the 2026 rules.
| Payment | Gross | Federal | South Carolina | Net |
|---|---|---|---|---|
| 1 | $6,216,243 | $2,267,190 | $323,866 | $3,625,186 |
| 10 | $9,643,433 | $3,535,250 | $502,423 | $5,605,759 |
| 20 | $15,708,136 | $5,779,190 | $818,394 | $9,110,551 |
| 30 | $25,586,898 | $9,434,332 | $1,333,077 | $14,819,488 |
The state rate may still fall after 2026 if the revenue triggers of Act 110 are met, which would help an annuity winner more than a cash winner, since most of the annuity is paid in later years. Lump sum or annuity weighs that choice with a return assumption of your own.
Charlotte and Augusta buyers
Fort Mill and Rock Hill sit in the Charlotte suburbs, and North Augusta faces Augusta, Georgia across the Savannah River. Buyers from both cities win South Carolina prizes, and section 59-150-230 makes those prizes taxable to nonresidents. Their home states tax them too and give a credit for the South Carolina tax. A Florida resident with a South Carolina ticket owes South Carolina and nothing at home.
| Winner lives in | South Carolina | Home state after credit | Kept |
|---|---|---|---|
| South Carolina | $26,050 | $0 | $319,836 |
| North Carolina | $24,490 | $454 | $320,942 |
| Georgia | $24,490 | $668 | $320,728 |
| Florida | $24,490 | $0 | $321,396 |
A South Carolinian who wins on a ticket from Georgia or North Carolina claims the credit on form SC1040TC, limited to the lesser of the net tax due the other state and the South Carolina tax on that income (SC1040TC). The pages read for this site do not state in so many words that South Carolina taxes its residents on out-of-state lottery prizes, so the calculator does not add a South Carolina tax in that case. Nonresident lottery tax covers the general rules.
Losses after the reform
Under the 2025 rules South Carolina started from federal taxable income, so gambling losses itemized federally flowed into the state return (SC1040 instructions 2025). From 2026 the state starts from federal adjusted gross income and uses its own deduction, and the official texts read for this page do not say how gambling losses are treated under the new base. Every figure is an estimate on the 2026 law, not tax advice. Lottery play costs money; the National Problem Gambling Helpline answers at 1-800-MY-RESET (NCPG).