Lottery winnings tax in Iowa
Iowa taxes lottery winnings as ordinary income at a flat 3.8%.
On a $50,000 lottery win, $13,900 is withheld at payout. The tax comes to $12,250 ($10,350 federal and $1,900 Iowa), and you get $1,650 back when you file, so you keep $37,750. 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
$37,750
Cash at payout
$36,100
Total tax
$12,250
Over-withheld
$1,650
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $1,900
- Iowa withholding at payout
- $1,900
- Over-withheld
- $1,650
- You keep
- $37,750
$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.
Iowa taxes gambling winnings as ordinary income.
Iowa requires the payer to hold back 3.8% 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 $12,250 in federal and state tax: an effective rate of 24.5%.
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
- Iowa tax
- Iowa taxes lottery winnings as ordinary income at a flat 3.8%.[1]
- 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]
- Iowa withholding
- Iowa withholds 3.8% on lottery winnings over $600.[5]
- Gambling losses
- Iowa starts from federal taxable income, so gambling losses lower your Iowa tax only if you itemize them federally, with the federal 90% limit.[6] How the federal 90% loss rule works
- Visitors
- Iowa taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]
- Where to play
- Iowa runs a state lottery.[8]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Iowa.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $57 | $180 | $57 | $1,263 |
| $2,000 | Yes | $76 | $240 | $76 | $1,684 |
| $10,000 | Yes | $2,780 | $1,550 | $380 | $8,070 |
| $50,000 | Yes | $13,900 | $10,350 | $1,900 | $37,750 |
| $100,000 | Yes | $27,800 | $22,114 | $3,800 | $74,086 |
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:[9]
- 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 Iowa tax on lottery winnings?
- Iowa taxes lottery winnings as ordinary income at a flat 3.8%.[1]
- Does Iowa withhold tax from lottery winnings?
- Iowa withholds 3.8% on lottery winnings over $600.[5]
- Do visitors pay Iowa tax on lottery winnings?
- Iowa taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]
More for Iowa
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] Iowa DOR: Iowa Withholding Tax Information · checked September 22, 2026
- [6] Iowa DOR IA 1040 Expanded Instructions, Intro 4: Conformity with the Internal Revenue Code · checked September 22, 2026
- [7] Iowa DOR: Iowa Tax On Gambling · checked September 22, 2026
- [8] Covers, Legal sports betting in the US · checked September 22, 2026
- [9] IRS, Publication 529, Miscellaneous Deductions · checked September 28, 2026