Lottery winnings tax in Arizona
Arizona taxes lottery winnings as ordinary income at a flat 2.5%.
On a $50,000 lottery win, $13,250 is withheld at payout. The tax comes to $11,600 ($10,350 federal and $1,250 Arizona), and you get $1,650 back when you file, so you keep $38,400. That's for a single filer with $60,000 of other income and no gambling losses.
Updated · 2026 tax rules · How we calculate
You keep
$38,400
Cash at payout
$36,750
Total tax
$11,600
Over-withheld
$1,650
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $1,250
- Arizona withholding at payout
- $1,250
- Over-withheld
- $1,650
- You keep
- $38,400
$50,000 is at or above the $2,000 reporting threshold, so the payer files a W-2G with the IRS and gives you a copy.
The payer holds back 24% of winnings over $5,000 and sends it to the IRS. It's a prepayment, not the final tax.
Winnings are ordinary income stacked on your other $60,000. Your top dollar lands in the 22% bracket.
Arizona taxes gambling winnings as ordinary income.
Arizona requires the payer to hold back 2.5% for state tax.
More was withheld than these winnings add to your tax. The difference reduces what you owe on the rest of your return, or comes back as a refund.
$50,000 minus $11,600 in federal and state tax: an effective rate of 23.2%.
An estimate for 2026, not tax advice. It treats this win as your only gambling income for the year and leaves out local income taxes. Nothing you enter leaves your browser.
The rules
- Arizona tax
- Arizona taxes lottery winnings as ordinary income at a flat 2.5%.[1]Unverified
- Federal tax form
- Lottery prizes of $2,000 or more that are at least 300 times the ticket price are reported on a W-2G. The threshold was $600 before 2026.[2]
- Federal withholding
- 24% is withheld from lottery prizes of more than $5,000 (minus the ticket price). No 300x test applies to lotteries.[4]
- Arizona withholding
- Arizona withholds 2.5% whenever federal tax is withheld.[5]
- Gambling losses
- You can deduct losses only as an Arizona itemized deduction, up to your winnings. Arizona lets you itemize even if you took the federal standard deduction, and its itemized deductions follow the federal rules as of January 1, 2026, so the 90% limit applies.[6] How the federal 90% loss rule works
- Visitors
- Arizona does not tax nonresidents on lottery winnings. Visitors owe tax to their home state instead.[9]Unverified
- Where to play
- Arizona runs a state lottery.[10]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Arizona.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $38 | $1,283 |
| $2,000 | Yes | $0 | $240 | $50 | $1,710 |
| $10,000 | Yes | $2,650 | $1,550 | $250 | $8,200 |
| $50,000 | Yes | $13,250 | $10,350 | $1,250 | $38,400 |
| $100,000 | Yes | $26,500 | $22,114 | $2,500 | $75,386 |
Assumes a $2 ticket price, so the 300x test is met at every amount shown.
Records to keep for lottery winnings
Prizes are measured net of the ticket price. Nearly any prize large enough to report clears the 300x test.
Losses only count if you can prove them. For lottery winnings, the IRS suggests keeping:[11]
- Your ticket purchases, with dates, winnings and losses
- Unredeemed tickets, payment slips and winnings statements
All of this goes alongside the diary the IRS expects for every kind of gambling: keeping gambling records the IRS will accept.
Questions
- How much is Arizona tax on lottery winnings?
- Arizona taxes lottery winnings as ordinary income at a flat 2.5%.[1]Unverified
- Does Arizona withhold tax from lottery winnings?
- Arizona withholds 2.5% whenever federal tax is withheld.[5]
- Do visitors pay Arizona tax on lottery winnings?
- Arizona does not tax nonresidents on lottery winnings. Visitors owe tax to their home state instead.[9]Unverified
More for Arizona
All of Arizona's gambling tax rules · Lottery in every state
Sources
- [1] Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 · checked September 22, 2026
- [2] IRS, Instructions for Forms W-2G and 5754 (01/2026) · checked September 22, 2026
- [3] Federal Register, REG-113229-25 proposed rule (Apr. 17, 2026) · checked September 22, 2026
- [4] 26 U.S. Code § 3402 (withholding) · checked September 22, 2026
- [5] A.R.S. 43-405 Extension of withholding to gambling winnings · checked September 22, 2026
- [6] A.R.S. § 43-1042, Itemized deductions · checked October 2, 2026
- [7] A.R.S. § 43-105, Internal revenue code; definition; application · checked October 2, 2026
- [8] Arizona DOR, 2025 Form 140 Instructions · checked October 2, 2026
- [9] ADOR Private Taxpayer Ruling LR99-012 (1999) · checked September 22, 2026
- [10] American Gaming Association, State of the States 2025 · checked September 22, 2026
- [11] IRS, Publication 529, Miscellaneous Deductions · checked September 28, 2026