Lottery winnings tax in Vermont
Vermont taxes lottery winnings as ordinary income at graduated rates from 3.35% to 8.75%.
On a $50,000 lottery win, $15,000 is withheld at payout. The tax comes to $13,574 ($10,350 federal and $3,224 Vermont), and you get $1,426 back when you file, so you keep $36,426. 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
$36,426
Cash at payout
$35,000
Total tax
$13,574
Over-withheld
$1,426
- Form W-2G
- Yes
- Federal withholding at payout
- $12,000
- Federal tax on the winnings
- $10,350
- State tax
- $3,224
- Vermont withholding at payout
- $3,000
- Over-withheld
- $1,426
- You keep
- $36,426
$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.
Vermont taxes gambling winnings as ordinary income.
Vermont requires the payer to hold back 6% 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 $13,574 in federal and state tax: an effective rate of 27.1%.
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
- Vermont tax
- Vermont taxes lottery winnings as ordinary income at graduated rates from 3.35% to 8.75%.[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]
- Vermont withholding
- Vermont withholds 6% on lottery winnings over $5,000.[5]Unverified
- Gambling losses
- No. Vermont starts from federal adjusted gross income and allows its own standard deduction plus only one federal itemized deduction, for medical expenses. Gambling losses you itemize federally don't carry over.[7] How the federal 90% loss rule works
- Visitors
- Vermont taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[10]
- Where to play
- Vermont runs a state lottery.[11]Unverified
What you keep at different amounts
For a single filer with $60,000 of other income and no gambling losses, living and winning in Vermont.
| Won | W-2G | Withheld | Federal tax | State tax | You keep |
|---|---|---|---|---|---|
| $1,500 | No | $0 | $180 | $50 | $1,270 |
| $2,000 | Yes | $0 | $240 | $67 | $1,693 |
| $10,000 | Yes | $3,000 | $1,550 | $584 | $7,866 |
| $50,000 | Yes | $15,000 | $10,350 | $3,224 | $36,426 |
| $100,000 | Yes | $30,000 | $22,114 | $6,797 | $71,089 |
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 Vermont tax on lottery winnings?
- Vermont taxes lottery winnings as ordinary income at graduated rates from 3.35% to 8.75%.[1]Unverified
- Does Vermont withhold tax from lottery winnings?
- Vermont withholds 6% on lottery winnings over $5,000.[5]Unverified
- Do visitors pay Vermont tax on lottery winnings?
- Vermont taxes nonresidents on lottery winnings won there, so visitors may need to file a nonresident return.[10]
More for Vermont
All of Vermont'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] Vermont Lottery, What If I Win · checked September 22, 2026
- [6] 32 V.S.A. § 5841 · checked September 22, 2026
- [7] 32 V.S.A. § 5811. Definitions (Vermont Statutes Online) · checked October 2, 2026
- [8] Vermont 2025 Form IN-111 Instructions · checked October 2, 2026
- [9] IRS, Publication 529, Miscellaneous Deductions · checked September 28, 2026
- [10] 32 V.S.A. § 5823 · checked September 22, 2026