All About Lottery Taxes


Will You Pay Tax When You Win the Lottery?

Winning the lottery can make your dreams come true overnight and jackpot prizes often reach astronomical proportions. Before you receive your prize money, however, government tax collectors may claim their share of the prize. In some lotteries (such as the US Powerball), the advertised jackpots are in the prize amounts before the deduction of taxes, while in other lotteries, no taxes are deducted at all. Even so, you may be subject to local taxation, based on your country of residence. Always check with a tax professional if you come into a large sum of money.

Tax-Free Lottery Prizes Around the Globe

The lotteries listed below are considered "tax free" as their published prizes are exactly what you will receive when you win the jackpot. In some cases, certain taxes have already been deducted at source. If you have any questions about a specific lottery, please consult its tax requirements.

South Africa Lotto / Plus 1 / Plus 2
SA Daily Lotto South Africa Daily Lotto
SA PowerBall South Africa PowerBall
EuroMillions
Uk Lottery

Lottery Taxes Explained

Lottery taxes, like all taxes, are decided by the local/federal government where the ticket is physically purchased. Let's take a closer look at the different types of taxes a player will encounter.

Taxes at source are deducted by the Lottery Organisation prior to the prize being paid out to the winner. For example, if a player wins a $10 million USA PowerBall jackpot, then USA PowerBall and the US government will take out 30% of that before the player is given the money. Thus the total prize you receive from MagicLotto will be the prize post-tax.

Taxes that you may be subject to in your country of residence like income tax are the responsibility of the individual players, not MagicLotto. We recommend you consult with a financial advisor and accountant should you win a huge sum of money like a jackpot.

Taxes not deducted at the source are referred to as "further local taxation." These taxes differ based on the player's country of residence and includes income tax and others. Local taxation is the responsibility of the individual player. In the event of a huge win, we advise winners to contact a financial advisor and accountant who can address local taxation issues.

US Lotteries: Taxes 101

US lotteries are a bit more complicated than some other nations' games when it comes to taxes because their taxes differ depending on the state where the ticket is purchased. The payout of prizes is based on tax laws in each individual state. Below is a list of relevant US multi-state and state lotteries and their individual tax information. Currently a player cannot choose from which state their tickets are purchased for multi-state games. Information is presented for non-US residents only.

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US Powerball - Tickets for this lottery are purchased in Oregon. Lottery prizes are subject to taxation at source. There are three tax bands. Tax Band 1: Tax-free up to $599.99. Tax Band 2: Any prize between $600 and $1,499.99 is subject to a tax rate of 30% for non-residents. Tax Band 3: Any prize above $1,500 is subject to a tax rate of 38% for non-residents.

Lottery Taxation around the World

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Italy - There are seven tax bands. Tax Band 1: Tax-free up to €100. Tax Band 2: The portion of the prize between €100.01 and €300 is subject to a local retailer fee of €1.03. Tax Band 3: The portion of the prize between €300.01 and €500 is subject to a local retailer fee of €3.10. Tax Band 4: The portion of the prize between €500.01 and €1,000 is subject to a local retailer fee of €3.10 and a tax rate of 20%. Tax Band 5: Any portion of the prize between €1,000.01 and €5,200.00 is subject to a local retailer fee of €6.20 and a tax rate of 20%. Tax Band 6: Any portion of the prize between €5,200.01 and €52,000.00 is subject to a local retailer fee of €5.16 and a tax rate of 20%. Tax Band 7: Any portion of the prize exceeding €52,000.01 is subject to a tax rate of 20%. The 20% tax rate only applies to the portion of the prize exceeding €500. Prizes won in the Italy Lotto lottery are subject to a tax rate of 8%.

How do I pay taxes on lottery prizes I won through MagicLotto?

For taxed lotteries, you'll often see the phrase "lottery prizes are subject to taxation at source" in our results pages. This means that the taxes deducted directly by the lottery organisation and the local and/or federal government where the lottery takes place. Prizes are paid out to the winners only after all taxes are deducted. MagicLotto then deposits the full post-tax prize amount in the winner's account. MagicLotto takes no commission on lottery prizes.

Often taxes deducted at the source are dependent on the amount of money won. The differing tiers are called Tax Bands. On each individual lottery results page, you'll see each tax band written out in the Tax Requirement section of the info table.