The Virginia Lottery reports prizes of $600 or more to the IRS and Virginia Tax, and withholds state tax on those prizes. Federal withholding (24%) applies to prizes over $5,000. Virginia's top state income tax bracket is 5.75% — shown here as an estimate; confirm the current year's rate with Virginia Tax.
This page is general information, not tax advice. Rates change and personal situations differ — confirm with the Virginia Lottery, the IRS, and your state revenue department, or ask a tax professional.
| Prize | Withheld up front | Estimated Virginia tax (5.75%) | Estimated federal tax (your bracket) |
|---|---|---|---|
| $50 | Nothing withheld (under $600) | $3 | Taxable income — depends on your bracket |
| $500 | Nothing withheld (under $600) | $29 | Taxable income — depends on your bracket |
| $601 | State tax withheld + reported on Form W-2G (no federal withholding in the $600–$5,000 band) | $35 | 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) | $144 | Taxable income — depends on your bracket |
| $10,000 | State tax + 24% federal both withheld | $575 | 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.