Texas lottery tax in 2026: only Washington takes a share
Texas has no personal income tax, so a Texas prize meets one tax collector, the IRS. The difficulty is elsewhere: the withholding is too low and tickets bought over the state line are taxed by the state that sold them.
- Texas tax on a prize
- none
- Federal withholding
- 24 %
- Top federal rate
- 37 %
- Federal withholding starts above
- $5,000
Owed with the return on top of withholding
$34,114
Federal withholding is 24 % of a prize over $5,000; the federal tax actually due on this prize is $154,114 (30.8 %).
| Federal tax due | $154,114 |
| Federal withholding | $120,000 |
| State and city tax due | $0 |
| State withholding | $0 |
| Total withheld | $120,000 |
| Total tax | $154,114 |
Texas has no personal income tax on a lottery prize.
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
Texas levies no tax on the net income of individuals, and the Texas Lottery lists only federal withholding on its prizes, so a Texan who wins on a Texas ticket owes federal income tax and nothing else. On a $500,000 prize a single Texan with $60,000 of other income owes $154,114 of federal tax and keeps $345,886. The lottery withholds 24 %, $120,000, leaving $34,114 to pay with the 2026 return. The picture changes at the border: a ticket bought in New Mexico costs that Texan $27,141 of New Mexico tax and one bought in Louisiana $14,655, and Texas has no income tax against which to credit either. Visitors who buy in Texas owe Texas nothing, but Oklahoma, New Mexico and Arkansas tax their own residents on the prize.
Texas prize: withheld against owed
Owed with the return on top of withholding
$34,114
| Federal tax due | $154,114 |
| Federal withholding | $120,000 |
| State and city tax due | $0 |
| State withholding | $0 |
Why there is no Texas line on the claim form
The Texas Constitution bars a tax on the net incomes of individuals without a vote of the people (Texas Constitution, Article VIII), and the Comptroller presents the absence of a personal income tax as a feature of the state (Texas Comptroller). A lottery prize is income, so nothing at the state level applies to it: no rate, no state return, no state withholding. The Texas Lottery's frequently asked questions describe only the federal deduction made when a prize is paid (Texas Lottery FAQ). There is no city or county income tax in Texas either.
The federal gap
A Texas winner's whole tax bill is federal, and the withholding covers only part of it. The lottery withholds 24 % of a prize over $5,000; a prize of any size above a few hundred thousand dollars reaches the 37 % bracket of Rev. Proc. 2025-32. The table follows the gap as prizes grow.
| Prize | Federal tax | Withheld at the claim | Due with the return | Kept |
|---|---|---|---|---|
| $500,000 | $154,114 | $120,000 | $34,114 | $345,886 |
| $2,000,000 | $707,180 | $480,000 | $227,180 | $1,292,820 |
| $10,000,000 | $3,667,180 | $2,400,000 | $1,267,180 | $6,332,820 |
For the cash value of the October 21, 2026 Powerball jackpot, $267.5 million, a married couple from Houston with $90,000 of wages owes $98,912,111 federally, keeps $168,587,890, and still has $34,712,111 to send after the withholding. Winners who claim early in the year usually make an estimated payment for that quarter, since a balance this size can draw an underpayment penalty. Withholding against the tax due computes the gap for any amount.
Tickets from Louisiana, New Mexico, Oklahoma and Arkansas
Texans near the borders sometimes play in the neighboring state, and that is where a state tax appears. The state that sold the ticket can tax a nonresident on prizes of its own lottery; Texas, having no income tax, has nothing to credit against it. The same $500,000 prize, single filer, gives the following state bill.
| Ticket bought in | Nonresident rule | State tax | State withholding | Kept |
|---|---|---|---|---|
| Texas | none | $0 | $0 | $345,886 |
| Louisiana | taxes prizes over $500 | $14,655 | $15,000 | $331,231 |
| New Mexico | taxes its prizes | $27,141 | $30,000 | $318,745 |
| Oklahoma | taxes its prizes | $22,013 | not stated | $323,873 |
| Arkansas | not stated | not computed | not computed | $345,886 |
Two lines carry a caveat. Oklahoma treats in-state lottery winnings as Oklahoma income for nonresidents, but the official sources read for this site do not give the Oklahoma Lottery's withholding rate, so the table shows the tax and not a withholding. For Arkansas, the sources read state the resident withholding, 3.7 % over $5,000, but not whether a nonresident is taxed on an Arkansas prize, so no Arkansas tax is counted. Tickets bought in another state covers every pair.
Neighbors who buy in Texas
The flow also runs the other way. A resident of Oklahoma, New Mexico or Arkansas who wins on a Texas ticket pays no Texas tax, but each of those states taxes its residents on lottery prizes from elsewhere. With nothing paid to Texas, there is no credit to claim: on $500,000, the Oklahoma resident owes Oklahoma $22,500, the New Mexican owes $27,987 and the Arkansan $18,500. The Louisiana instructions read for this site do not say whether Louisiana taxes its residents on out-of-state lottery prizes, so no Louisiana figure is given for that case.
Annuity payments and later moves
A Texan who takes the annuity receives 30 payments, each 5 % larger than the one before, and each meets only the federal brackets of its year. On the $635 million jackpot the couple above would net $401,936,685 over 30 years after federal tax. The official Texas sources read do not address installments paid to a winner who later leaves the state; since Texas has no income tax, none is withheld for Texas in any case. A move to a state with an income tax would bring the later payments into that state's tax. Moving after a win explains the timing.
Gambling losses
With no state return, losses only matter federally: they are an itemized deduction, and from 2026 only 90 % of them can be deducted, up to winnings (Public Law 119-21). The federal loss rule gives the detail. These are estimates, not tax advice. Anyone who feels the playing has gone too far can call 1-800-MY-RESET, free and confidential.