The states that do not tax gambling and lottery winnings

State tax2026-10-06

9 states have no income tax on gambling or lottery winnings, so a single filer keeps about $680,000 of a $1,000,000 prize there after federal tax.

• 9states without the tax
• $680,000kept of $1,000,000

States Without Income Tax

Nine states impose no income tax on gambling or lottery winnings. As the key figures show, a single filer retains the majority of a large prize in these locations after federal deductions. The table below lists these jurisdictions. Each state applies this rule because it lacks a general personal income tax or limits taxation to specific categories like capital gains. This structure means state-level deductions do not reduce the net payout. Readers should note that federal obligations remain unchanged regardless of location. The absence of state tax simplifies the calculation for residents of these areas. It does not eliminate the need to report income for federal purposes. Use the winnings tax calculator to see specific estimates for your situation.

Federal Obligations Remain

Federal income tax applies in every state, including those with no state-level income tax. The federal government does not exempt winnings based on the recipient's residence. Therefore, the total tax burden consists solely of federal rates in these nine jurisdictions. This differs from states that levy additional taxes on top of federal requirements. The key figures illustrate the net result after federal deductions only. State exemptions do not alter federal bracket calculations or standard deductions. Readers must still file federal returns to claim these winnings. The distinction between federal and state liability remains critical for accurate planning. No state exemption reduces the federal percentage owed on the prize.

Non-Resident and Local Rules

A state where a non-resident wins may tax the prize, even if the winner lives elsewhere. This applies regardless of the home state's tax status. Some states, like California and Pennsylvania, exempt only prizes from their own state lottery. Winnings from other jurisdictions may still face taxation in these locations. These specific exemptions do not extend to all gambling income universally. The table above clarifies which states apply broad exemptions versus limited ones. Readers should verify the source of their winnings against the specific state rules. Local ordinances can affect the final net amount received. The interaction between residency and winning location determines the applicable tax rules.

Questions

Every figure on this page is computed by code from the 2026 federal and state brackets applied band by band and checked against a cumulative table. See the methodology.