Prize withholdings are calculated on the total amount of gross proceeds (the amount of winnings minus the amount wagered).įor example, if you purchase a $50.00 ticket that has a prize of $5,007.00, taxes would not be automatically withheld because the gross proceeds are less than $5,000, ($5,007.00 - $50.00 = $4,957.00). The tax withholding rate is 24% for lottery winnings, less the wager, for prizes greater than $5,000.Īn example of the calculation used to determine whether a prize winning exceeds the threshold for required withholding is detailed below:

citizens, the Federal Government requires the Texas Lottery Commission to report the following lottery winnings to the IRS: