KENTUCKY LOTTERY TAX · TAX YEAR 2026
Kentucky lottery tax calculator
Kentucky taxes lottery winnings as income, at its flat 3.5% rate. On a $1,000,000 prize with $75,000 of wages, a single filer owes $35,000 of Kentucky tax and $340,080 of federal income tax, $375,080 in all, and keeps $624,920.
Tax on your prize
- Total tax on the prize
- $375,080.25
- Federal income tax
- $340,080.25
- Kentucky tax
- $35,000.00
- After-tax prize
- $624,919.75
- Effective rate
- 37.51%
- Federal withholding at 24%
- $240,000.00
- Kentucky withholding at 3.5% (2025)
- $35,000.00
- Still owed at tax time
- $100,080.25
Kentucky tax by size of prize
What a single filer with $75,000 of wages owes on a prize, and what Kentucky withholds from it.
| Prize | Federal tax | State tax | State withholding |
|---|---|---|---|
| $10,000 | $2,200 | $350 | $350 |
| $100,000 | $23,064 | $3,500 | $3,500 |
| $1 million | $340,080 | $35,000 | $35,000 |
| $10 million | $3,670,080 | $350,000 | $350,000 |
Kentucky lottery tax questions
Does Kentucky tax lottery winnings?
Yes. Kentucky taxes lottery winnings as income, at its flat 3.5% rate.
How much tax is due on a $1,000,000 lottery prize in Kentucky?
A single filer with $75,000 of wages owes $340,080 of federal income tax and $35,000 of Kentucky tax on a $1,000,000 prize, $375,080 in all, and keeps $624,920. On a $100,000 prize, Kentucky tax is $3,500 and federal tax $23,064.
How much is withheld from a Kentucky lottery prize?
Kentucky withholds 3.5%, its 2025 published rate, for state tax and 24% for federal tax from a prize over $5,000. On a $1,000,000 prize, $275,000 is withheld against $375,080 of tax, leaving $100,080 to pay at tax time.
What the calculator leaves out
Federal tax stacks the prize on wages after the 2026 standard deduction and taxes it at the ordinary brackets. Withholding treats the whole prize as winnings, though the IRS tests winnings minus the wager. The calculator takes the cash received this year: a lump sum is taxed in full the year it is paid, and annuity payments are taxed each year as they are received. Gambling losses are left out; only filers who itemize can deduct them, and from 2026 only up to 90% of losses. Tax another state may charge on a ticket bought there is left out.
Sources
- IRS Topic 419, Gambling income and losses
- IRS Instructions for Forms W-2G and 5754
- IRS Publication 505 (2026), Tax Withholding and Estimated Tax
- IRS Revenue Procedure 2025-32: 2026 tax brackets
- Kentucky withholding instructions for employers (Rev. October 2025)
- 2026 Kentucky withholding tax formula: 3.5% rate and $3,360 standard deduction