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Use our free calculator to see your 2025 lottery winnings after federal and state taxes. Compare lump sum vs. annuity, get tax breakdowns, and your estimated take-home pay!

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Tennessee Tax Highlights

Federal Tax

Up to 37%

Tennessee Tax

Calculate Your Lottery Taxes

Calculate your after-tax winnings with detailed tax breakdown including withholding and full liability estimates. Federal taxes calculated using single filer brackets.

Your State

Payout Type

Annual Income (Optional)

Tennessee Tax Details

Tennessee does not tax lottery winnings.

Federal Tax Status

Non-U.S. citizen/resident (30% flat rate)

Winnings Amount (Cash Value)

Enter the cash value amount. This lump sum will be taxed upfront.

Tennessee After-Tax Winnings

Ready to Calculate?

Enter your details to see your after-tax winnings

Quick Answer

Tennessee Lottery Tax Rates

Federal Tax

24-37%

24% withholding on winnings over $5,000, with final liability up to 37% based on your total income and tax bracket.

Tennessee State Tax

No state income tax on lottery winnings.

Total Combined Rate

24-37%

Federal only - no state or local taxes

Example: $1M Win

~$630K after tax

Tax Assessment

Is Tennessee a good state for lottery taxes?

Tennessee is an excellent state for lottery winners due to its 0% state tax rate on all lottery winnings. Only federal taxes apply, maximizing your take-home amount. Residents and non-residents alike benefit from this tax-friendly policy.

Use our calculator above to see your exact after-tax amount for any winning.

Tax Obligation

Do You Pay Taxes on Lottery Winnings in Tennessee?

Federal Taxes

YES

All lottery winnings over $600 are taxable income for federal tax purposes.

•Automatic Withholding: 24% federal tax withheld on winnings over $5,000
•Final Liability: May owe up to 37% depending on your total income and tax bracket
•Additional Tax: Difference between 24% withholding and actual rate due when filing

Tennessee State Taxes

Tennessee does not tax lottery winnings. You only pay federal taxes.

Small Wins ($600-$5,000)

Winnings between $600 and $5,000 have no automatic withholding, but you still owe taxes when filing your return.

What Happens:

✓Receive W-2G tax form
✓No taxes withheld upfront
✓Full amount paid to you

What You Owe:

✓Federal taxes (10-37%)
✓No state taxes
✓Report on Form 1040, Line 8

Required Forms

Tax Forms You'll Receive

Form W-2G
Issued for winnings over $600. Shows amount won and taxes withheld.
Form 1040
Report winnings on Line 8 "Other Income" when filing federal return.
No State Forms
Tennessee requires no state tax forms for lottery winnings.

Summary: You pay federal taxes on all lottery winnings over $600. Tennessee does not impose state taxes, making it one of the most tax-friendly states. Use our calculator to see exact amounts.

Tax Information

Tennessee Lump Sum Lottery Tax Information

Use our enhanced Tennessee lottery tax calculator with Simple/Advanced modes to estimate your after-tax winnings. Our calculator distinguishes between immediate withholding (24% federal for winnings over $5,000) and your actual tax liability when filing returns. Since Tennessee does not tax lottery winnings, only federal taxes apply, but you may still owe additional taxes beyond the 24% withholding. Get precise estimates of your total after-tax winnings including both withholding and additional tax liabilities.

Tennessee Lottery Tax Facts

State Tax Rate: 0% (No state tax on lottery winnings)
Tax Form Required: W-2G for lottery winnings over $600, and additional state forms may be required
Federal Tax: 24% withholding for winnings over $5,000, but actual liability may be higher (up to 37%) based on progressive tax brackets and your total income
Lump Sum Payment: For jackpot games like Powerball or Mega Millions, lump sum is typically 60% of the advertised amount before taxes; smaller prizes like scratch-offs are paid at face value.

Features

Why Use Our Tennessee Lottery Tax Calculator?

Zero State Tax Advantage

Tennessee has no state tax on lottery winnings - only federal taxes apply. Our calculator shows the exact federal liability beyond the 24% withholding.

Withholding vs Liability Breakdown

See both immediate tax withholding (what's taken out) and your actual tax liability (what you'll owe when filing), including estimates for small wins under thresholds.

Complete Lump Sum vs Annuity Analysis

Compare tax implications of lump sum (immediate progressive taxation) vs annuity (30 years of graduated payments with 5% annual increases).

Progressive Federal Tax Brackets

Uses actual 2025 federal tax brackets (10%-37%) for single filers instead of flat rates, showing precise tax liability based on your total income.

Free Enhanced Calculator

Access all features including estimated income integration, local tax calculations, and comprehensive tax breakdowns without any fees or registration.

Tennessee Tax Quick Facts

State Tax Rate

No state tax

Federal Tax Rate

24-37%

Progressive brackets

Most accurate Tennessee lottery tax calculator with progressive bracket calculations and federal tax support.

Tennessee Lottery Tax FAQs

Get answers to common questions about lottery taxes in Tennessee, including state-specific withholding, tax rates, and filing requirements. Last updated: January 31, 2026.

How much tax will I pay on lottery winnings in Tennessee?

In Tennessee, you will primarily pay federal taxes on your lottery winnings, as the state does not impose an income tax. Federal withholding is 24% on prizes over $5,000, and your total federal tax liability could reach up to 37% depending on your income bracket. Lottery prizes of $600 or more are reported to the IRS via Form 1099-MISC, and the Tennessee Lottery withholds federal taxes automatically for larger prizes. There are no state or local income taxes on these winnings in Tennessee, making it more favorable than many other states. Your actual tax owed is determined when you file your federal return, factoring in deductions and credits. For example, suppose you win a $1 million lump-sum prize. The lottery withholds $240,000 for federal taxes upfront, giving you $760,000 initially. If your total income places you in the top 37% bracket as a single filer, you might owe an additional $130,000 or so when filing, resulting in about $370,000 total federal tax and roughly $630,000 kept after taxes. To get an accurate estimate for your situation, consult a tax professional who can run projections based on your full financial picture.

Do both federal and state taxes apply to lottery winnings in Tennessee?

No, only federal taxes apply to lottery winnings in Tennessee because the state has no income tax. You will face federal withholding and taxes, but Tennessee does not tax lottery prizes at the state level. The Tennessee Lottery handles federal withholding of 24% on prizes exceeding $5,000 paid to a single individual. State taxes are not withheld or owed on these winnings, which is a significant advantage. However, if you have other income, it all combines for federal tax calculations. Consider a $500,000 prize: only federal 24% ($120,000) is withheld, netting you $380,000 immediately, with no state tax bill from Tennessee. Your final federal liability might adjust upward based on your overall income. Always review your tax situation with a certified accountant to ensure compliance with federal rules.

What are the specific tax rules for lottery winnings in Tennessee?

Tennessee's specific rule is that lottery winnings are not subject to state income tax, but they are fully taxable at the federal level with mandatory withholding on larger prizes. Prizes under $600 are not reported, but anything $600 or more triggers IRS reporting via Form 1099-MISC. The Tennessee Lottery withholds 24% federal tax on winnings over $5,000, and for non-resident aliens, it may withhold 30%. There are no local taxes on lottery prizes in Tennessee. Winnings count as ordinary income, added to your other earnings for the year. For a $10,000 scratch-off win, no withholding occurs if under thresholds, but it's reported if $600+. On a $1 million jackpot, expect $240,000 federal withholding right away. While this outlines the basics, we recommend consulting a tax professional for your specific circumstances.

Are lottery winnings considered taxable income?

Yes, lottery winnings are considered taxable ordinary income by the IRS, just like wages or other earnings. In Tennessee, they are added to your total income for federal tax purposes but escape state taxation. Both lump-sum and annuity payments are taxed in the year received, at your marginal federal tax rate up to 37%. The lottery issues a Form 1099 for prizes $600+, and withholding applies to bigger wins. If you win $100,000, it's reported as income; if you're in the 22% bracket, you might owe around $22,000 federal tax after any withholding, depending on deductions. Keep detailed records of your winnings and consult a tax advisor to maximize deductions.

How much of my lottery winnings will I actually keep after taxes?

After federal taxes and withholding, you could keep 60-75% of your Tennessee lottery winnings, depending on your tax bracket and prize size, since there's no state tax. The exact amount varies with your total income and deductions. Federal withholding of 24% is automatic on prizes over $5,000, but you may owe more or get a refund when filing. High earners face up to 37% federal rate. For a $1 million lump-sum prize, $240,000 is withheld federally, leaving $760,000. If you're single in the 37% bracket, additional taxes bring the total federal hit to about $370,000, so you keep roughly $630,000. Use a tax calculator or professional to project your net take-home based on your details.

How does my filing status affect taxes on lottery winnings in Tennessee?

Your filing status significantly impacts your federal tax bracket and liability on lottery winnings, as Tennessee has no state tax to complicate it. Married filing jointly often results in lower effective rates due to wider brackets. Single filers hit higher brackets faster; for 2025, the 37% top rate starts at about $609,350. Joint filers reach it at $731,200. Head of household falls in between. Example: A $1 million win for a single filer might incur 37% on much of it, owing ~$370,000 total federal. Married jointly, brackets fill slower, potentially reducing liability to ~$320,000. Determine your optimal filing status and consult a tax expert early.

What are the tax differences between choosing a lump sum and an annuity for lottery winnings?

A lump sum taxes the entire amount in one year at your current bracket, potentially pushing you into higher rates, while an annuity spreads taxes over years as payments are received. Both are ordinary income federally; Tennessee taxes neither. Lump sum: Immediate cash after 24% withholding, but big one-year hit. Annuity: Smaller annual taxes, possibly lower brackets each year. For a $10 million jackpot with $6 million lump sum (after initial withhold ~$1.44M), one-year tax could be ~$2M+ total federal. Annuity over 30 years at $333k/year might tax at 24-32% annually, totaling less overall due to bracket management. Evaluate both with a financial planner before deciding.

What factors should I consider when deciding between a lump sum and an annuity?

Key factors include your age, financial needs, investment savvy, tax implications, and inflation, as Tennessee offers both options without state tax interference. Lump sum gives control now; annuity provides steady income. Consider immediate debts, investment returns vs. annuity rate, longevity risk, and market timing. Annuities protect against overspending but may lose value to inflation. If you're 40 with investment experience, a $5 million lump sum might grow faster than a 30-year annuity paying $167,000/year. A retiree might prefer annuity stability. Discuss with a fiduciary advisor to model scenarios tailored to you.

How are lottery winnings taxed if I'm an out-of-state winner claiming a Tennessee prize?

As an out-of-state winner of a Tennessee lottery prize, the TN Lottery withholds only federal taxes (24% over $5,000), but your home state may tax it as income. Tennessee imposes no state tax on any winners. Your resident state determines if they tax lottery winnings; states like California or New York do, while Florida or Texas do not. You file accordingly. Example: $1M win from Alabama—TN withholds $240k federal, you get $760k. Alabama taxes lottery income, so expect ~5% state tax (~$38k additional) plus federal adjustments. File returns in both states if required and seek cross-state tax advice.

What is the claim deadline for Tennessee lottery prizes?

The claim deadline for most Tennessee lottery prizes is 180 days from the draw date. Missing it means forfeiting the prize entirely. This applies to draw games like Powerball or Lotto America; scratch-offs have similar timelines from purchase. Check your ticket immediately and contact the TN Lottery. For a December 1, 2025, drawing won on December 19, you have until May 29, 2026, to claim. Prizes over $5,000 require in-person claims with ID. Mark your calendar and visit the official Tennessee Lottery website or hotline right away.

Can I remain anonymous if I win the lottery in Tennessee?

No, you cannot remain anonymous for large lottery wins in Tennessee, as the state requires disclosure of the winner's name and city of residence. This applies to prizes claimed from tickets bought in Tennessee. Tennessee Lottery publicly releases winner details for prizes over $10,000 to promote transparency, unlike states that allow full anonymity. Out-of-state winners still face disclosure when claiming. For a $1M Powerball win bought in TN, your name and city become public after claiming, potentially attracting attention. Prepare for publicity and consider legal protections like trusts with professional guidance.

What legal strategies can I use to reduce taxes on my lottery winnings?

Legal strategies include choosing an annuity to spread income, maximizing deductions, charitable donations, and setting up trusts, all while complying with IRS rules in tax-free Tennessee. Avoid anything illegal like underreporting. Donate to qualified charities for itemized deductions up to 60% of AGI; gift up to $18,000 per person annually (2025) without gift tax; consider irrevocable trusts for estate planning. On a $1M win, donating $200,000 could cut your taxable income, saving ~$74,000 at 37% rate. Annuity keeps annual income lower. Work with a CPA and estate attorney to implement strategies legally.

What are the consequences of not paying taxes on lottery winnings?

Not paying taxes on lottery winnings can lead to IRS penalties, interest, liens, wage garnishment, and in severe cases, criminal charges for evasion. Tennessee has no state tax involvement, but federal rules are strict. The IRS matches 1099 forms to your return; underpayment incurs 0.5% monthly failure-to-pay penalty plus interest. Evasion can mean fines up to $250,000 or prison. If you owe $100,000 on a win and ignore it, penalties could add 20-25% quickly, plus asset seizure. Pay estimates quarterly and hire a tax pro to avoid troubles.

How do Tennessee lottery taxes compare to other states?

Tennessee is one of the best states for lottery taxes with no state income tax on winnings, only federal, unlike high-tax states like New York (up to 10.9% state) or California (13.3%). Many states tax residents on any-source winnings; no-tax states like FL, TX, WA match TN. Powerball/Mega jackpots face federal + state in places like NY. $1M win in TN: ~37% federal max. In NY: +8.82% state (~$88k more). Keeps more in TN. If relocating, factor your home state's rules and consult a tax advisor.

State Tax Resources

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Tennessee Tax Information

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Data Sources & References

Tax Data Sources

Our Tennessee lottery tax calculator uses official tax rates and withholding thresholds from the following authoritative sources:

IRS Publication 525 - Taxable and Nontaxable Income
Federal tax treatment of lottery winnings, withholding requirements, and reporting obligations
IRS Publication 17 - Your Federal Income Tax (2025)
2025 federal tax brackets, rates, and filing status information
Tennessee Department of Revenue
Tennessee does not impose state income tax on lottery winnings
Tennessee State Lottery Commission
Official lottery rules, claim periods, and payout structures

Last Updated: January 31, 2026

Researched By: Lottery Valley Tax Research Team

Disclaimer: This calculator provides estimates for educational purposes only. Tax laws are complex and subject to change. Consult a certified public accountant (CPA) or tax attorney for advice specific to your situation.

Important Legal Information

Important Disclaimer & Legal Information

Please review the following important information about our lottery tax calculator and its limitations.

Calculator Limitations

This calculator provides estimates based on current tax rates and standard scenarios. Your actual tax liability may vary based on your total income, deductions, credits, and other individual circumstances not accounted for in this calculation.

Professional Advice Required

We strongly recommend consulting with qualified tax professionals before making any decisions based on these calculations. This includes:

Certified Public Accountants (CPAs) for tax planning and preparation
Tax Attorneys for complex legal and tax matters
Financial Advisors for investment and wealth management strategies

Tax Rate Accuracy

While we strive for accuracy, tax rates and laws change frequently. This calculator reflects rates as of January 2025. Always verify current rates with official sources or tax professionals, especially for large lottery winnings.

No Legal or Tax Advice

This calculator is for informational purposes only. It does not constitute legal, tax, or financial advice. Lottery Valley and its representatives are not responsible for any decisions made based on these calculations.

For corrections, questions, or professional referrals, please contact us at hello@lotteryvalley.com

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