Lottery winnings tax in North Carolina
North Carolina taxes lottery winnings as ordinary income at a flat 3.99%.
On a $50,000 lottery win, $13,995 is withheld at payout. The tax comes to $12,345 ($10,350 federal and $1,995 North Carolina), and you get $1,650 back when you file, so you keep $37,655. 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
$37,655
Cash at payout
$36,005
Total tax
$12,345
Over-withheld
$1,650
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $1,995
- North Carolina withholding at payout
- $1,995
- Over-withheld
- $1,650
- You keep
- $37,655
$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.
North Carolina taxes gambling winnings as ordinary income.
North Carolina requires the payer to hold back 3.99% 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 $12,345 in federal and state tax: an effective rate of 24.7%.
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
- North Carolina tax
- North Carolina taxes lottery winnings as ordinary income at a flat 3.99%.[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]
- North Carolina withholding
- North Carolina withholds 3.99% on lottery winnings of $600 or more.[5]
- Gambling losses
- From tax year 2025, North Carolina lets you include gambling losses in your North Carolina itemized deductions, up to the amount federal law allows, which for 2026 is 90% of losses, capped at winnings. You don't need to itemize federally, but it only helps if your North Carolina itemized deductions beat the North Carolina standard deduction.[7] How the federal 90% loss rule works
- Visitors
- North Carolina taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[11]
- Where to play
- North Carolina runs a state lottery.[13]
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in North Carolina.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $60 | $180 | $60 | $1,260 |
| $2,000 | Yes | $80 | $240 | $80 | $1,680 |
| $10,000 | Yes | $2,799 | $1,550 | $399 | $8,051 |
| $50,000 | Yes | $13,995 | $10,350 | $1,995 | $37,655 |
| $100,000 | Yes | $27,990 | $22,114 | $3,990 | $73,896 |
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:[12]
- 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 North Carolina tax on lottery winnings?
- North Carolina taxes lottery winnings as ordinary income at a flat 3.99%.[1]
- Does North Carolina withhold tax from lottery winnings?
- North Carolina withholds 3.99% on lottery winnings of $600 or more.[5]
- Do visitors pay North Carolina tax on lottery winnings?
- North Carolina taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[11]
More for North Carolina
All of North Carolina'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] N.C.G.S. 105-163.2B; NCDOR sports wagering FAQ Q11 · checked September 22, 2026
- [6] NCDOR FAQ on Sports Wagering Excise Tax and Winnings/Losses (Apr 2024) · checked September 22, 2026
- [7] Session Law 2026-41 (Senate Bill 257), Section 44.2 · checked October 2, 2026
- [8] Session Law 2026-31, Section 12.(a) (IRC reference date updated to July 5, 2025) · checked October 2, 2026
- [9] NCDOR Important Notice: Impact of Recently Enacted Laws on North Carolina Individual and Corporate Income Tax Returns (July 2026) · checked October 2, 2026
- [10] NCDOR 2025 Form D-401 Individual Income Tax Instructions · checked October 2, 2026
- [11] N.C.G.S. 105-153.4 · checked September 22, 2026
- [12] IRS, Publication 529, Miscellaneous Deductions · checked September 28, 2026