Lottery winnings tax in New Jersey
New Jersey Lottery prizes of $10,000 or less are exempt, including Powerball and Mega Millions tickets bought in New Jersey. Larger prizes and all out-of-state lottery prizes are taxable.
Updated · 2026 tax rules · How we calculate
You keep
$36,600
Cash at payout
$35,500
Total tax
$13,400
Over-withheld
$1,100
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $3,050
- New Jersey withholding at payout
- $2,500
- Over-withheld
- $1,100
- You keep
- $36,600
$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.
New Jersey taxes gambling winnings as ordinary income.
New Jersey requires the payer to hold back 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 $13,400 in federal and state tax: an effective rate of 26.8%.
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
- New Jersey tax
- New Jersey Lottery prizes of $10,000 or less are exempt, including Powerball and Mega Millions tickets bought in New Jersey. Larger prizes and all out-of-state lottery prizes are taxable.[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]
- New Jersey withholding
- New Jersey withholds 8% on lottery winnings over $500,000. New Jersey withholds 5% on lottery winnings over $10,000. New Jersey withholds 3% whenever federal tax is withheld.[5]Unverified
- Gambling losses
- You can subtract gambling and lottery losses from the same year from your winnings on NJ-1040 line 24 without itemizing, down to zero. The federal 90% limit doesn't apply.[1]
- Visitors
- New Jersey taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[5]
- Where to play
- New Jersey runs a state lottery.[6]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in New Jersey.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $0 | $1,320 |
| $2,000 | Yes | $0 | $240 | $0 | $1,760 |
| $10,000 | Yes | $2,400 | $1,550 | $0 | $8,450 |
| $50,000 | Yes | $14,500 | $10,350 | $3,050 | $36,600 |
| $100,000 | Yes | $29,000 | $22,114 | $6,235 | $71,651 |
Assumes a $2 ticket price, so the 300x test is met at every amount shown.
Questions
- How much is New Jersey tax on lottery winnings?
- New Jersey Lottery prizes of $10,000 or less are exempt, including Powerball and Mega Millions tickets bought in New Jersey. Larger prizes and all out-of-state lottery prizes are taxable.[1]
- Does New Jersey withhold tax from lottery winnings?
- New Jersey withholds 8% on lottery winnings over $500,000. New Jersey withholds 5% on lottery winnings over $10,000. New Jersey withholds 3% whenever federal tax is withheld.[5]Unverified
- Do visitors pay New Jersey tax on lottery winnings?
- New Jersey taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[5]
More for New Jersey
All of New Jersey's gambling tax rules · Lottery in every state
Sources
- [1] 2025 NJ-1040 Instructions, Line 24 · 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] NJ Division of Taxation - Lottery and Gambling Winnings · checked September 22, 2026