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October Surprise 2016

How are Lottery Winnings Taxed? Understanding the Actual Take-Home …

Now comes the actual taxes: The federal government treats lottery winnings as ordinary income, so you’ll pay federal income tax at the highest rate (currently 37% for income over $578,125 for single filers). Additionally, there’s an automatic 24% federal withholding when you claim the prize. Then there are state taxes, which vary dramatically.