Lottery winnings tax in Kentucky
Kentucky taxes lottery winnings as ordinary income at a flat 3.5%.
Updated · 2026 tax rules · How we calculate
You keep
$37,900
Cash at payout
$38,000
Total tax
$12,100
Due when you file
$100
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $1,750
- Still to pay when you file
- $100
- You keep
- $37,900
$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.
Kentucky taxes gambling winnings as ordinary income.
Tax owed ($12,100) minus what was withheld ($12,000). Set this aside. A large balance can also mean an underpayment penalty unless you make an estimated payment.
$50,000 minus $12,100 in federal and state tax: an effective rate of 24.2%.
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
- Kentucky tax
- Kentucky taxes lottery winnings as ordinary income at a flat 3.5%.[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]
- Kentucky withholding
- No Kentucky withholding requirement for lottery winnings. Tax is due when you file.[5]Unverified
- Gambling losses
- If you itemize, you can deduct wagering losses allowed under federal law, including the 90% limit, even though Kentucky disallows most other itemized deductions.[6]
- Visitors
- Kentucky taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]Unverified
- Where to play
- Kentucky 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 Kentucky.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $53 | $1,268 |
| $2,000 | Yes | $0 | $240 | $70 | $1,690 |
| $10,000 | Yes | $2,400 | $1,550 | $350 | $8,100 |
| $50,000 | Yes | $12,000 | $10,350 | $1,750 | $37,900 |
| $100,000 | Yes | $24,000 | $22,114 | $3,500 | $74,386 |
Assumes a $2 ticket price, so the 300x test is met at every amount shown.
Questions
- How much is Kentucky tax on lottery winnings?
- Kentucky taxes lottery winnings as ordinary income at a flat 3.5%.[1]
- Does Kentucky withhold tax from lottery winnings?
- Kentucky has no withholding requirement for lottery winnings. Tax is due when you file.[5]Unverified
- Do visitors pay Kentucky tax on lottery winnings?
- Kentucky taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[7]Unverified
More for Kentucky
All of Kentucky'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] KRS 154A.110 Prizes taxable -- Withholdings from prize · checked September 22, 2026
- [6] KRS 141.019 Calculation of adjusted gross income and net income (effective July 15, 2026) · checked September 22, 2026
- [7] KRS 141.020 Levy of income tax on individuals · checked September 22, 2026
- [8] Covers, Legal sports betting in the US · checked September 22, 2026