Where a state tax is withheld, the amount is taken automatically. If you’re hoping to dodge automatic tax withholdings on your lottery prize (with the exception of the federally required 24%), these are the best states to win in: Some of the 45 states that sell Powerball and Mega Millions tickets don’t withhold their own taxes on your winnings while most others will. You’ll also likely find yourself in the top federal tax bracket of 37% (remember, these rates are progressive, so you won’t actually lose 37% of the whole payout to federal taxes), and, depending on where you live, you’ll be paying state taxes on your winnings. If you win over $5,000 from a Powerball or Mega Millions jackpot, or any lottery game, state lotteries are required to withhold 24% in federal taxes automatically, according to Intuit.
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