The 6 Worst States to Win the Lottery In
Maryland and New Jersey make the list. See where your state ranks.
Winning a major lottery prize is often considered a stroke of luck, but if you happen to strike it rich, the state you reside in can significantly impact the size of your windfall. While nine states don't impose state tax on lottery winnings, there are several others that do, and the percentage they deduct can be quite substantial. Let's take a closer look at the six worst states to win the lottery in, per WGN—those that levy the highest state tax on winnings.
New York tops the list with the highest state tax rate on lottery winnings in the nation, siphoning off a staggering 10.8%. If you're a fortunate winner living in New York City, brace yourself for an additional 3.8% tax on top of the state tax, and residents of Yonkers are subject to 1.8% extra.
In Maryland, winning a prize above $5,000 will see the state claiming 8.95% in taxes from your windfall. While the joy of winning can be immense, it's essential to be prepared for this substantial deduction.
The District of Columbia imposes an 8.5% tax on lottery winnings exceeding $5,000, in addition to the federal tax of 24% that applies to all states. For DC residents striking it rich, the combined tax burden can be quite substantial.
If you're fortunate enough to win a lottery prize over $500,000 in the Garden State, get ready to hand over 8% to state taxes. Smaller payouts between $10,001 and $500,000 are not spared either, subject to a 5% state tax—unless you fail to provide a valid Taxpayer ID number, in which case it jumps back to 8%.
Oregon, too, takes a significant cut from your lottery winnings, automatically withholding 8% as state tax on all prizes of $1,500 or more. Though it may not be the highest rate, it can still substantially reduce your overall winnings.
In Wisconsin, winners face a state tax of 7.65% on lottery sums of $2,000 or more. For larger payouts of $5,001 or above, there's a double whammy—with 7.65% taken by the state and an additional 24% withheld for federal taxes. Winning the lottery is undoubtedly a life-changing event, but if you find yourself in one of these six states, your excitement might be slightly tempered by the substantial taxes. As always, it's crucial to be aware of the tax implications in your state and plan accordingly when striking gold in the lottery.
