Illinois Lottery winnings are subject to tax at a federal and state level. There are no withholdings on smaller prizes, but if you land a big jackpot the tax obligations will hit your payout in a substantial way. Find out more below about taxes on lottery winnings in Illinois, and use the calculator to see how much tax you would have to pay on a win.
Use the Tax Calculator above to find out how much you would receive if you won an Illinois Lottery prize. The advertised jackpot for Lotto, Powerball or Mega Millions shows what you would be paid if you took the annuity option, but does not take into account how the payouts would be impacted by tax. A lot of players also prefer to take the cash option rather than the annuity.
In the Payout Calculator, specify the prize amount and whether you would choose the cash or the annuity, and you will see the total value of the payout.
If you buy a Powerball or Mega Millions ticket outside of Illinois, remember that the rate of state tax varies significantly from jurisdiction to jurisdiction. There is no state tax in some locations, while others withhold far more than Illinois.
As tax is such a complicated issue and an individual’s personal circumstances can make a big difference to what they owe, it is always recommended that you consult a financial planner or tax attorney if you win a big prize.
Federal and State Taxes
Depending on the size of your prize, you will see taxes collected by the federal government and the state of Illinois. Here are the payout rules to be aware of:
- Federal taxes are withheld from prizes of $5,000 or more at a rate of 24 percent to 37 percent.
- State taxes apply to all prizes of $1,000 or more, at a rate of 4.95 percent.
You will need to fill out an IRS W-2-G Form if you win any prize of $600 or more. This will either be attached to the check you receive from the Illinois Lottery, or will be mailed out to you by the end of January from the Illinois Comptroller’s Office.
Additional taxes may also be due if you are cannot provide proof of your Social Security number, or if you are a non-resident alien. Failure to mark the citizenship status section on the claim form will result in federal withholdings from all prizes over $600.
If you are a non-resident alien or do not indicate your citizenship status, the rate of federal taxes ranges from 30 percent to 37 percent.
Taxes for Lottery Pools
If you win a major prize as part of a lottery pool, it can be split between the group and everyone paid their individual portion. The tax liability will also be divided between members. You just need to make sure the claim form is completed in one person’s name and you also attach an IRS Form 5754, which details the names, addresses, Social Security numbers and prize shares of everyone in the group.
The Illinois Lottery will then issue separate IRS W-2G Forms to every member of the group. For lottery pools where the prize is more than $25,000, the payments and tax forms are issued by the Illinois Comptroller’s Office.