Virginia lottery tax: generous to visitors, strict with its own residents
Virginia taxes lottery prizes of $600 or more at rates up to 5.75 %, and its resident credit for tax paid elsewhere excludes lottery and gambling winnings.
- Top Virginia rate
- 5.75 %
- Taxable from
- $600
- Lottery withholding
- 4 % over $5,000
- Credit on out-of-state prizes
- None
State and local tax, ticket bought in Maryland
$66,878
Bought at home in Virginia: $28,750. Difference: $38,128.
| Prize this year | $500,000 |
| Federal income tax (top rate reached 35 %) | $137,129 |
| Maryland tax as a nonresident | $38,128 |
| Virginia tax | $28,750 |
| Withheld when the prize is paid | $163,750 |
| Still to pay with the return | $40,256 |
| After all taxes | $295,994 |
Maryland taxes nonresidents on prizes of its lottery. Virginia gives no credit for another state's tax on lottery winnings.
Compiled by Radif Partners · How we calculate · brackets, state rates and lottery rules read on official sites · estimate, not tax advice
Virginia taxes a lottery prize of $600 or more as income for residents, nonresidents and part-year residents alike, under 23VAC10-140-281; smaller Virginia Lottery prizes are subtracted on the return. Income above a low threshold is taxed at 5.75 %, so a married couple with $140,000 of wages who win $500,000 owe Virginia $28,750 and the IRS $137,129, and keep $334,122. The Virginia Lottery withholds 4 % of the whole prize when it exceeds $5,000, and withholding is required for every nonresident winner. The sharpest rule runs the other way: the 2025 Form 760 instructions list lottery and gambling winnings as income that does not qualify for the credit on Schedule OSC. A Virginian who wins on a Maryland or North Carolina ticket pays that state as a nonresident and Virginia in full, with nothing offset: on the same prize, $66,878 of state tax on a Maryland ticket instead of $28,750 at home. Visitors from Maryland, the District of Columbia or North Carolina face Virginia tax, which their home state usually credits.
A Virginian with a ticket from another state
State and local tax, ticket bought in Maryland
$66,878
| Prize this year | $500,000 |
| Federal income tax (top rate reached 35 %) | $137,129 |
| Maryland tax as a nonresident | $38,128 |
| Virginia tax | $28,750 |
Brackets that flatten fast
Virginia's schedule has four steps, but the last one, 5.75 %, starts at $17,000 of taxable income for every filing status, so any prize of size is taxed at 5.75 % almost from the first dollar. The standard deduction is $8,750 for a single filer and $17,500 for a couple through tax year 2026, after which the 2025 increase is scheduled to end; the personal exemption is $930 a person. For a $10,000 prize won by a single filer earning $45,000, Virginia adds $575 and the IRS $1,200.
The $600 floor
23VAC10-140-281 states that lottery prizes of $600 or more are subject to Virginia income tax for residents, nonresidents and part-year residents, and Virginia Lottery prizes under that amount are subtracted on the Form 760 (23VAC10-140-281). The floor applies prize by prize, which matters for scratch tickets and daily games where most wins are small. Federal law has no such floor: every prize is income on the federal return, even below the $2,000 W-2G reporting line.
Withholding at the claim
Under 23VAC10-140-282 the Virginia Lottery withholds 4 % on prizes over $5,000, computed on the entire prize, and the withholding is required for every nonresident winner (23VAC10-140-282). With federal withholding of 24 %, the couple's $500,000 claim leaves $360,000 in hand. The Virginia part runs short of the tax because the top rate is above the withholding rate, and the federal part runs short because the prize reaches higher brackets: $25,879 is still due with the 2026 returns. Withholding against the tax due isolates that gap.
Winning across the Potomac or in Carolina: taxed twice
Va. Code 58.1-332(A) limits the resident credit to tax on earned or business income and capital gains, and the 2025 Form 760 instructions name lottery or gambling winnings as nonqualifying income for Schedule OSC (Va. Code 58.1-332; 2025 Form 760 instructions). A Virginian who wins on a ticket from a state that taxes nonresidents pays both states in full. The District of Columbia does not tax nonresidents on its lottery, so a DC ticket costs the Virginian nothing extra.
| Virginia couple, ticket from | Tax to that state | Virginia tax | All state tax | Kept |
|---|---|---|---|---|
| Virginia | $28,750 | $28,750 | $334,122 | |
| Maryland | $38,128 | $28,750 | $66,878 | $295,994 |
| North Carolina | $19,155 | $28,750 | $47,905 | $314,966 |
| District of Columbia | $0 | $28,750 | $28,750 | $334,122 |
The Maryland row is the costliest because Maryland taxes a nonresident's lottery prize at its state rates and Virginia credits none of it and Maryland's special nonresident tax, levied in place of county tax, which the figures include. Maryland lottery tax explains the nonresident side.
Neighbors who win in Virginia
Virginia-source income includes prizes paid by the Virginia Lottery and winnings from wagers placed or paid at a location in Virginia. The visitor files a Virginia nonresident return, and 23VAC10-140-282 points the visitor to the home state for a credit. Maryland grants it on Form 502CR, North Carolina on Form D-400TC, and the District through its own credit worksheet.
| Couple on a Virginia ticket | Virginia tax | Home tax after credit | Kept |
|---|---|---|---|
| Maryland residents | $27,679 | $1,247 | $333,946 |
| North Carolina residents | $27,679 | $795 | $334,397 |
| District of Columbia residents | $27,679 | $18,446 | $316,747 |
The reverse-credit list, and why it changes nothing here
For income in general, the Form 760 instructions tell Virginians to take no Virginia credit for income from Arizona, California, Oregon: those states credit the Virginia tax on their nonresident returns, and for the District the remedy is a refund of DC withholding. For lottery prizes the list has no effect on the Virginia side, since Virginia gives no lottery credit at all. It can still help a Virginian who wins in Oregon, whose nonresident return credits Virginia tax; the Arizona page shows the mechanism from the other end.
Losses and installments
Virginia itemized deductions follow federal Schedule A, and a filer who itemizes federally must itemize in Virginia, so gambling losses up to winnings are deductible only by federal itemizers. Whether the federal limit to 90 % of losses that starts in 2026 (Public Law 119-21) carries into Virginia's 2026 return is not confirmed in the official texts read. Help for anyone whose betting has gone too far is free at 1-800-MY-RESET. No Virginia text read for this site addresses annuity installments paid after a winner leaves the state; moving after winning the lottery covers the states that do. The figures are estimates on the 2026 rules as read and are not tax advice.