Do You Pay Income Tax on NY Lotto Number Games?

Playing the New York Lotto game can be alluring and fun -- especially if you end up winning money. Whether you visit or live in New York and take a chance on the Lotto, don’t allocate winnings if your numbers are drawn quite yet. The state will deduct income tax from your jackpot before you see a dollar of your prize money. Learn more about the process by downloading Internal Revenue Service Publication 140-W: “FAQs; New York State Lottery Winners.”

How it Works

Most states with revenue generating programs such as lotto number games give players a fairly concise set of rules so it’s easy to participate. In New York, you head for any New York Lottery retailer and pick up a player’s card featuring 10 game panels. Use a blue or black pen or pencil to mark six numbers between one and 59 and hand over your money. If you hate making decisions, go the Quick Pick route and have the state’s lottery computer pick your six numbers. It costs $1 to $5 to play. Lotto administrators recommend not waiting until the last minute to buy tickets if you hate long lines.

The Winning Ticket

You must stay up a little late to find out if you’re a New York Lotto game winner since the drawing is broadcast live on select area television stations on Wednesday and Saturday nights at 11:21 p.m. The host draws seven numbers -- the extra one is a bonus number to determine a second prize winner. If your numbers are drawn, claim your prize within 60 days by turning your card into a Lotto retailer. At that point, the numbers are verified, you will be given a choice of a lump sum payment or a longer term payout. Your Social Security number identifies you as the winner -- something the federal government and New York State are happy to get because they are waiting to grab their share if your winnings are more than $600.

Income Tax Withholding

The New York State Department of Taxation and Finance saves you the trouble of having to declare the taxes on your Lotto winnings. It deducts them from your winnings. Typical tax withholding rates assessed by the federal government for New York Lotto winners range between 25 percent and 28 percent. The State of New York withholds 8.82 percent of your winnings, and if you live in New York City, the Big Apple takes a bite equaling 3.876 percent. If you live in Yonkers, the local withholding is 1.323 percent. So if someone who lives in Brooklyn, for example, wins $1,000, his actual take after all of the withholding could be less than $600. Federal and state laws mandate these withholdings, even if you live in Kentucky and buy your ticket on a visit to Manhattan.

Pay Withholding Again?

Winners playing the New York Lotto give the Internal Revenue Service a windfall in income taxes -- on a $389 million dollar lump settlement, $97 million goes straight to the IRS. But that might not be the end of your obligation. If your state also imposes withholding taxes, you could wind up sending it a share of your pot, too. If you live in a state with no state income tax, then there is no further withholding after the New York State Department of Taxation and Finance is finished withholding its part. Otherwise, you could face additional state withholding from your own state department of revenue. To find out if you live in a state that can impose yet another income tax, visit The Tax Foundation website to view the organization’s table "listing withholding tax rates by state."

Photo Credits

  • new york image by Gerhard Führing from Fotolia.com

About the Author

Based in Chicago, Gail Cohen has been a professional writer for more than 30 years. She has authored and co-authored 14 books and penned hundreds of articles in consumer and trade publications, including the Illinois-based "Daily Herald" newspaper. Her newest book, "The Christmas Quilt," was published in December 2011.

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