Do You Pay Taxes on Scratch-Off Winnings?
Short answer: yes. Every dollar you win on a scratch-off is taxable income in the US. How it's handled depends mostly on the size of the prize. Here's the practical version — though for anything substantial, talk to a tax professional, not a lottery website.
Small wins: still taxable, no paperwork
Win $50 on a scratcher and the store just pays you. There's no withholding and no form — but the IRS still considers it taxable income you're supposed to report. Most people fold small wins into their annual return (or, realistically, don't — which is technically underreporting).
The $600 line
At $600 or more (and 300x your wager), the lottery reports the prize to the IRS and gives you a W-2G form. You'll usually claim these at a lottery office rather than the corner store. The win is documented, so it's on the record when you file.
Big wins: 24% withheld upfront
For prizes over $5,000, the lottery withholds 24% for federal taxes before you ever see the money. That withholding is a prepayment, not your final bill — a large prize can push you into a higher bracket, so you may owe more at tax time (or get some back if too much was withheld).
State taxes vary a lot
Some states take an additional cut of lottery winnings; others don't. Notably, Texas and Florida have no state income tax, so winners there only face federal tax. New York, by contrast, has one of the higher state rates. Where you buy and where you live both matter.
None of this changes which game is smart to buy — that's about remaining prizes, which is what the Heat Score measures. Taxes just determine how much of a win you keep.
This is general information, not tax advice. For a real prize, consult a licensed tax professional. 18+ (21+ in some states) · 1-800-GAMBLER.
Frequently asked questions
＋ － Do you have to pay taxes on scratch-off winnings?
Yes. In the US, lottery and scratch-off winnings are taxable income at the federal level, and in most states at the state level too. You report them on your federal return regardless of amount, even small wins.
＋ － How much tax is withheld from lottery winnings?
For US residents, prizes over $5,000 have 24% withheld for federal taxes upfront, and the lottery issues a W-2G. Your actual tax may be higher or lower depending on your total income when you file. State withholding varies — some states take an additional cut, a few (like Texas and Florida) have no state income tax.
＋ － What is the $600 rule for lottery winnings?
At $600 or more (and at least 300x the wager), the lottery reports the win to the IRS and issues a W-2G form. Below $600 there's usually no automatic reporting or withholding, but the winnings are still taxable income you're required to report.