1. What is California Lottery Tax?

California does not impose state taxes on lottery winnings, but federal taxes still apply. This calculator helps you determine how much you'll owe in federal taxes and what your net prize will be.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Prize \) — The amount won in the lottery (USD)
• \( 0 \) — California state tax rate on lottery winnings
• \( 0.24 \) — Federal withholding tax rate (24%)

3. California Lottery Tax Rules

Details: California is one of the few states that doesn't tax lottery winnings. However, the IRS requires 24% federal withholding on prizes over $5,000. Additional taxes may apply when filing your annual return if you're in a higher tax bracket.

4. Using the Calculator

Tips: Enter your prize amount in USD. The calculator will show you the federal tax withholding (24%) and your estimated net prize. Remember that additional taxes may be due when you file your annual return.

5. Frequently Asked Questions (FAQ)

Q1: Is there really no state tax on lottery winnings in California?
A: Correct. California does not impose state income tax on lottery winnings.

Q2: Is the federal tax always 24%?
A: 24% is the mandatory withholding rate. Your actual tax liability may be higher depending on your total income and tax bracket.

Q3: What about smaller prizes?
A: Prizes under $600 are generally not reported to the IRS. Prizes between $600-$5,000 are reported but not subject to mandatory withholding.

Q4: Are there any other taxes?
A: You may owe additional federal taxes when you file your return, and if you share the prize, each recipient may owe taxes on their portion.

Q5: What if I take the annuity option?
A: Taxes are withheld from each annual payment, and the calculation is similar for each payment.