All About Lottery Taxes

Will You Pay Tax When You Win the Lottery?

Winning the lottery can make your dreams come true overnight and jackpot prizes often reach astronomical proportions. Before you receive your prize money, however, government tax collectors may claim their share of the prize. In some lotteries (such as the US Powerball and Mega Millions), the advertised jackpots are the prize amounts before the deduction of taxes, while in other lotteries, no taxes are deducted at all. Even so, you may be subject to local taxation based on your country of residence. Always check with a tax professional if you come into a large sum of money.

Tax-Free Lottery Prizes Around the Globe

The lotteries listed below are considered "tax free" as their published prizes are exactly what you will receive when you win the jackpot. In some cases, certain taxes have already been deducted at source. If you have any questions about a specific lottery, please consult its tax requirements.

Australia Oz Lotto Australia Oz Lotto
Australia Powerball Australia Powerball
Australia Saturday Lotto Australia Saturday Lotto
Australia Weekday Windfall Australia Weekday Windfall Lotto
Austria EuroMillions Austria EuroMillions
Austria Lotto Austria Lotto
Canada Lotto 6/49 Canada Lotto 6/49
France Loto France Loto
Germany Lotto Germany Lotto
Hungary Hatoslotto Hungary Hatoslotto
Hungary Otoslotto Hungary Otoslotto
Italy MillionDAY Italy MillionDAY
Japan Loto 6 Japan Loto 6
Japan Loto 7 Japan Loto 7
Japan Mini Loto Japan Mini Loto
New Zealand Lotto New Zealand Lotto
New Zealand Powerball New Zealand Powerball
Ontario 49 Ontario 49
South Africa Daily Lotto South Africa Daily Lotto
South Africa Lotto South Africa Lotto
South Africa Powerball South Africa Powerball

Lottery Taxes Explained

Lottery taxes, like all taxes, are decided by the local/federal government where the ticket is physically purchased. Let's take a closer look at the different types of taxes a player will encounter.

Taxes at source are deducted by the lottery organisation prior to the prize being paid out to the winner. For example, if a player wins a US$5 million Mega Millions jackpot, then Mega Millions and the US government will take out 30% of that before the player is given the money. Thus the total prize you receive from LottoSmile will be the prize post-tax.

Taxes that you may be subject to in your country of residence like income tax are the responsibility of the individual players, not LottoSmile. We recommend you consult with a financial advisor and accountant should you win a huge sum of money like a jackpot.

Taxes not deducted at the source are referred to as "further local taxation." These taxes differ based on the player's country of residence and includes income tax and others. Local taxation is the responsibility of the individual player. In the event of a huge win, we advise winners to contact a financial advisor and accountant who can address local taxation issues.

US Lotteries: Taxes 101

While taxes on US lottery winnings differ depending on the state where the ticket is purchased, the following information is accurate for tickets purchased on LottoSmile. The payout of prizes is based on tax laws in each individual state. Below is a list of relevant US multi-state and state lotteries and their individual tax information. Currently a player cannot choose from which state their tickets are purchased for multi-state games. Information is presented for non-US residents only.

US Powerball - Lottery prizes are subject to taxation at source. There are three tax bands. Tax Band 1: Tax-free up to US$599.99. Tax Band 2: Any prize between US$600 and US$1,499.99 is subject to a tax rate of 30% for non-residents. Tax Band 3: Any prize above US$1,500 is subject to a tax rate of 38% for non-residents.

US Mega Millions - Lottery prizes are subject to taxation at source. There are three tax bands. Tax Band 1: Tax-free up to US$599.99. Tax Band 2: Any prize between US$600 and US$4,999.99 is subject to a tax rate of 30% for non-residents. Tax Band 3: Any prize above US$5,000 is subject to a tax rate of 38.82% for non-residents.

Texas lotteries - Lottery prizes are subject to taxation at source. There are two tax bands. Tax Band 1: Tax-free up to US$599.99. Tax Band 2: Any prize over US$600 is subject to a tax rate of 30% for non-residents.

* Check the tax laws in your country of residence for any further local taxation you may be subject to.

Lottery Taxation around the World

All taxes listed below are deducted at the source.


 Chile - There is one tax band of 17%. The advertised Clasico Loto jackpot reflects prize amount after taxes have been deducted.

Colombia - There are two tax bands. Tax Band 1: Tax-free up to Cop 70,000. Tax Band 2: Any portion of the prize exceeding Cop 70,000 is subject to a tax rate of 20%.

Italy - There are seven tax bands. Tax Band 1: Tax-free up to €100. Tax Band 2: The portion of the prize between €100.01 and €300 is subject to a local retailer fee of €1.03. Tax Band 3: The portion of the prize between €300.01 and €500 is subject to a local retailer fee of €3.10. Tax Band 4: The portion of the prize between €500.01 and €1,000 is subject to a local retailer fee of €3.10 and a tax rate of 20%. Tax Band 5: Any portion of the prize between €1,000.01 and €5,200.00  is subject to a local retailer fee of €6.20 and a tax rate of 20%. Tax Band 6: Any portion of the prize between €5,200.01 and €52,000.00  is subject to a local retailer fee of €5.16 and a tax rate of 20%. Tax Band 7: Any portion of the prize exceeding €52,000.01 is subject to a tax rate of 20%.
The 20% tax rate only applies to the portion of the prize exceeding €500.
Prizes won in the Italy Lotto lottery are subject to a tax rate of 8%. Prizes for Italy MillionDAY are quoted and paid as net amounts, after the 8% tax has been deducted.

Kazakhstan - There is one tax band. Any portion of the prize exceeding KZ₸17,502  will be subject to a tax rate of 10% for Kazakhstani residents and 20% for non-residents.

Mexico - There is one tax band of 7%.

Peru - There are two tax bands. Tax Band 1: Tax-free up to S/.19. Tax Band 2: Any prize over S/.19 is subject to a tax rate of 10%.

Philippines - There are two tax bands. Tax Band 1: Tax-free up to ₱10,000.00. Tax Band 2: Any portion of the prize exceeding ₱10,000.00 is subject to a tax rate of 20%.

Poland - There are two tax bands. Tax Band 1: Tax-free up to PLN 2,280. Tax Band 2: Any portion of the prize exceeding PLN 2,280 is subject to a tax rate of 10%.

Portugal - There are two tax bands. Tax Band 1: Tax-free up to €5,000. Tax Band 2: Any portion of the prize exceeding €5,000 is subject to a tax rate of 20%.

Romania - There are three tax bands. Tax Band 1: Prizes from RON 1 to RON 10,000 are subject to a tax rate of 3%. Tax Band 2: Prizes between RON 10,001 and RON66,750 are subject to a flat tax of RON 300 and a tax rate of 20% on the amount that exceeds RON 10,000. Tax Band 3: Prizes over RON 66,751 are subject to a flat tax of RON 11,650 and a tax rate of 40% on the amount over RON66,750.

Spain - There are two tax bands. Tax Band 1: Tax-free up to €40,000. Tax Band 2: Any portion of the prize exceeding €40,000 is subject to a tax rate of 20%. Citizens of most countries other than Spain are entitled to a full tax refund in order to prevent double taxation. Claiming this refund is the sole responsibility of the player and must be done through the Spanish tax authorities. Tax refunds when approved will be issued during the following calendar year.
The El Million raffle has a lower tax-free threshold of €24,000. Any portion of the prize exceeding this amount is subject to a tax rate of 20%

Ukraine - There is one tax band of 19.5%.

* Check the tax laws in your country of residence for any further local taxation you may be subject to.

How do I pay taxes on lottery prizes I won through LottoSmile?

For taxed lotteries, you'll often see the phrase "lottery prizes are subject to taxation at source" in our results pages. This means that the taxes deducted directly by the lottery organisation and the local and/or federal government where the lottery takes place. Prizes are paid out to the winners only after all taxes are deducted. LottoSmile then deposits the full post-tax prize amount in the winner's account. LottoSmile takes no commission on lottery prizes.

Often taxes deducted at the source are dependent on the amount of money won. The differing tiers are called Tax Bands. On each individual lottery results page, you'll see each tax band written out in the Tax Requirement section of the info table.