Short answer: lottery winnings are taxable income. For large NY scratch-off prizes, federal and New York withholding can be taken before payout; NYC residents may owe additional city tax.
Reviewed by Tom Whitaker, Compliance Reviewer · 2026-06-09
For prizes over $5,000, lottery payers commonly withhold 24% federal tax and New York State withholding before you receive the net payout. NYC residents may also owe city income tax. Withholding is not always your final tax bill — it is a prepayment against what you actually owe when filing.
Even if no tax is withheld at the register, gambling winnings are taxable income. Keep records of wins, losses, tickets, receipts, and claim forms. Loss deductions have strict IRS rules and usually require itemizing.
| Item | Typical treatment |
|---|---|
| Gross prize | $10,000 |
| Federal withholding | 24% withheld before payout |
| NY state withholding | NY withholding may apply before payout |
| Final tax owed | Depends on total income, deductions, residency, and filing status |
Use this only as a planning example; consult a tax professional for personal advice.
Yes. Lottery winnings are taxable income. Large prizes can have federal and New York withholding taken before payout; smaller prizes may still need to be reported even when no tax is withheld.
For prizes over $5,000, federal withholding is commonly 24%, and New York State withholding may also apply. NYC residents may owe additional city tax.
Gambling losses may be deductible only up to gambling winnings and typically only if you itemize and keep records. Ask a tax professional before relying on a deduction.
This guide is informational, not legal or tax advice. Always verify requirements with the official NY Lottery before submitting a winning ticket.Data sourced from nylottery.ny.gov and NY Open Data. Independent, non-commercial project. Play responsibly — NY Problem Gambling · 1-877-8-HOPENY.