Most lottery tax articles quote federal rates and stop. In New York the state and, for city residents, the city add a large second layer. Below are the rates, three worked examples and what you can and can't do about it.
What taxes do New York lottery winners pay?
Federal tax. The lottery withholds 24% on prizes over $5,000, under the IRS Form W-2G rules. That's a down payment. Lottery winnings are ordinary income, and for 2026 the top 37% bracket starts at $640,600 of taxable income for a single filer, according to the IRS's 2026 inflation adjustments. A jackpot winner ends up paying close to 37% on almost the whole prize.
New York State tax. New York's rates are progressive, with a top rate of 10.9% on taxable income over $25 million. Above that level, the state's tax computation worksheets apply 10.9% to all of your taxable income, including the first $25 million. New Jersey and Washington, D.C. top out at 10.75%; California's higher top rate doesn't matter here because California doesn't tax California Lottery prizes. Under Publication 140-W, the Lottery must withhold state tax at the highest rate on prizes over $5,000.
New York City tax. City residents pay city income tax as well, at a top rate of 3.876%, and the Lottery withholds it at that rate if you lived in the city when you won. Yonkers residents pay a Yonkers surcharge instead, equal to 16.75% of their state tax, which works out to about 1.8% of a top-bracket prize.
Together, state and city take 14.776% from a top-bracket NYC winner before any federal tax.
How much tax on a $1 billion jackpot in New York City?
Take a real one. The $1.04 billion Powerball jackpot drawn on August 12, 2026 had a cash value of $450.5 million. If an NYC resident had won it and taken the cash, the rough split would have been:
| New York City resident | Florida or Texas resident | |
|---|---|---|
| Cash value | $450.5 million | $450.5 million |
| Federal (about 37%) | $166.7 million | $166.7 million |
| New York State (10.9%) | $49.1 million | none |
| New York City (3.876%) | $17.5 million | none |
| Take-home | about $217 million | about $284 million |
That's a difference of about $67 million for living in New York City. These are estimates. The federal figure is slightly high because the first $640,600 is taxed at lower rates, and the result ignores deductions and other income.
How much did the $2 billion winner get after taxes?
Edwin Castro won the $2.04 billion Powerball in November 2022 with a ticket bought in Altadena, California, and took a lump sum of about $997.6 million. California doesn't tax California Lottery prizes, so his bill was essentially federal tax at 37%, leaving roughly $628 million. Had a New York City resident claimed the same lump sum, state and city tax at 14.776% would have taken about another $147 million. His story is in our biggest jackpot winners guide.
How much tax do you pay on $1 million in New York?
Say a single filer in New York City wins $1 million in 2026.
If the prize is the winner's only income, federal tax comes to about $320,000, since part of the income is taxed in lower brackets. If a high salary already puts the winner in the top bracket, the whole prize is taxed at 37%, about $370,000. The 24% withheld at claim time ($240,000) won't cover either amount.
State and city tax are lower than the withholding suggests. At around $1 million of income, New York's rate schedule works out to an effective flat 6.85%, or about $68,000. City tax is about $38,000. Because the Lottery withholds at the top rates of 10.9% and 3.876%, part of that withholding comes back as a refund when you file.
Take-home ends up around $525,000 to $575,000, a little over half the prize. For the national picture, including states with no income tax, see our big-jackpot tax breakdown and lottery tax rates by state.
Can you avoid New York lottery tax?
Not by where you claim. What matters is where you live and where the ticket was sold. Publication 140-W says a prize of more than $5,000 from the New York Lottery is New York-source income, so a nonresident who wins on a ticket bought in New York still owes New York State tax. City tax applies only if you were a New York City resident when you won. A New Yorker who wins in another state generally owes New York tax on it as a resident too.
What you can control is planning: choosing between the lump sum and annuity (see lump sum vs annuity), structuring any gifts and charitable giving, and getting a tax adviser involved before you claim. New York doesn't let winners stay anonymous, which is covered in our New York anonymity guide.
Frequently asked questions
How much are lottery winnings taxed in New York?
Up to 37% federal, 10.9% New York State and, for New York City residents, 3.876% city tax. At the top rates that's about 51.8% of the prize.
How much tax does the New York Lottery withhold?
On prizes over $5,000, 24% federal tax, state tax at the highest state rate (10.9%), and, for city residents, city tax at the top city rate (3.876%). Your final bill can be higher or lower than what's withheld.
How much do you take home if you win $1 million in New York City?
Roughly $525,000 to $575,000 for a single filer, depending on other income. Federal tax is about $320,000 to $370,000, and state and city tax together about $106,000.
Do non-residents pay New York tax on lottery winnings?
Yes, on prizes over $5,000 from tickets bought in New York, which the state treats as New York-source income. New York City tax applies only to city residents.
Estimates for illustration, not tax advice; a real win calls for a CPA or tax attorney. Sources: IRS Instructions for Forms W-2G and 5754; IRS 2026 inflation adjustments; New York Publication 140-W; New York 2025 Form IT-201 instructions (rate schedules and tax computation worksheets); Powerball draw results for August 12, 2026. If gambling stops being fun, call 1-800-MY-RESET.
