The Texas Lottery reports prizes of $600 or more to the IRS. Federal withholding (24%) applies to prizes over $5,000. No state tax applies. Texas has no state individual income tax, so no state tax is withheld from lottery prizes.
This page is general information, not tax advice. Rates change and personal situations differ — confirm with the Texas Lottery, the IRS, and your state revenue department, or ask a tax professional.
| Prize | Withheld up front | Estimated Texas tax (0%) | Estimated federal tax (your bracket) |
|---|---|---|---|
| $50 | Nothing withheld (under $600) | $0 | Taxable income — depends on your bracket |
| $500 | Nothing withheld (under $600) | $0 | Taxable income — depends on your bracket |
| $601 | State tax withheld + reported on Form W-2G (no federal withholding in the $600–$5,000 band) | $0 | Taxable income — depends on your bracket |
| $2,500 | State tax withheld + reported on Form W-2G (no federal withholding in the $600–$5,000 band) | $0 | Taxable income — depends on your bracket |
| $10,000 | State tax + 24% federal both withheld | $0 | 24% ($2,400) withheld up front; final amount depends on your bracket |
Yes — withholding is a prepayment, not the final bill. The prize still goes on your federal return (and your state return) as income. If more was withheld than you owe you get the difference back; if less, you pay the rest at filing time.
Generally the state where you bought the winning ticket can tax the prize (you may file a nonresident return there), and your home state taxes it too — but your home state usually gives you a credit for tax paid to the other state, so you are not taxed twice on the same dollars. A tax professional can confirm how your two states handle it.
Prizes of $600 or more are reported to the IRS on Form W-2G. Smaller prizes are not reported automatically, but legally they are still taxable income.
Federal income tax withholding of 24% applies to lottery prizes over $5,000. Below that, nothing is withheld for the IRS up front, but the prize is still taxable.