Lottery Tax Calculator

How it works

cash option = jackpot × cash % · tax = (cash − tax-free amount) × (national + local rate) · lump sum after tax = cash − tax · still owed = tax − withheld · first annuity payment = jackpot × g ÷ ((1 + g)ⁿ − 1) (jackpot ÷ n if g = 0), growing g a year · each payment after tax = payment − (payment − tax-free amount ÷ n) × rate

Big lottery jackpots are usually advertised as the total of an annuity paid over many years (30 graduated payments growing 5% a year for US Powerball and Mega Millions); the cash option is a smaller lump sum. Prize tax differs by country: the US taxes winnings as ordinary income and withholds 24% federal tax on large prizes, so winners in the top bracket owe more at filing; Spain taxes prizes above €40,000 at 20%; many countries do not tax lottery wins at all. Enter your own rates and tax-free amount.

Worked example

A $1,000,000 jackpot with a 50% cash option pays $500,000.00 before tax. At a 37% national rate and 5% local rate, tax is $210,000.00 (42.00%), leaving a lump sum after tax of $290,000.00. Withholding of 24% takes $120,000.00 at payout, so $90,000.00 is still owed at tax time. The annuity instead starts at $15,051.44 a year ($8,729.83 after tax) and pays $580,000.00 after tax over 30 annuity payments.

Sources: IRS — Topic 419, Gambling income and losses · Powerball — Official site (annuity: 30 payments growing 5% a year) · Agencia Tributaria — Gravamen especial sobre premios de loterías

Frequently asked questions