If you’ve won money playing NY lotto games, it’s time to celebrate. Just don’t go overboard, because if you figure out your taxes on lottery winnings by calculator, you’ll realize you’ll owe a substantial amount. You'll have to pay income taxes on lottery winnings in New York.
You do have to pay a substantial amount of income tax on NY lotto games, more so if you're a resident of New York City or Yonkers.
NY Lottery Tax Calculator
According to the New York Lottery and Gaming Commission, the withholding rates after lotto winnings for 2019 are 24 percent for federal tax and New York state withholding of 8.82 percent. If you are a New York City resident, you’ll pay an additional 3.876 percent in tax, and if you live in Yonkers, you’ll pay 1.477 percent.
Federal withholding for non-resident aliens is 30 percent. That means if you are a U.S. citizen who lives in New York City, your lottery payout calculator is just 63.304 percent of the stated winnings, since you’ll pay 36.696 percent in federal, state and local taxes.
The $5,000 Threshold
By law, the New York Lottery and Gaming Commission must withhold federal and state taxes on all taxable prizes worth more than $5,000. If you win more than $600 but owe taxes to the state or have past-due child support, the amount of the overdue taxes or child support owed is withheld. Anyone who has ever been on public assistance and wins more than $600 will also have the repayment amount owed to the state withheld.
The Highest Lottery Taxes in the Country
If the sheer size of the amount of taxes owed after lotto winnings surprises you, keep in mind that New York’s lottery taxes are the highest in the country. In California, another state well-known for high taxes in general, there is no state tax on lottery winnings as long as the ticket was purchased in California. According to the New York Post, citing a Powerball payout calculator, New York taxes such winnings at the state’s highest income bracket.
Since a person only has a 1 in 292 million chance of winning Powerball, individuals don’t have much chance of winning big, but New York does. The New York Post could not find state or city officials who would comment on why lottery taxes are so high there.
Winning Powerball in New York
So what if you did win the Mar. 6, 2019 Powerball jackpot of $9.20 million and are a New York State resident? The New York Lottery website explains that if you chose the annuity of $9.20 million, you would receive 26 annual payments in the amount of $353,846.15 per year, but the federal tax liability is $88,461.54 per year and the state tax liability is $31,209.23 per year. That means your net annual payment after tax withholding is $234,175.38 per year. Of course, if you're a New York City or Yonkers resident, you'll owe additional local taxes.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Financial Advisor, Sapling, nj.com and The Nest.