How much is withheld from large lottery jackpots in California at the time of payout?

1. What is actually withheld immediately from a large California jackpot — the hard numbers

When a California Lottery prize exceeds the $5,000 federal reporting threshold, the Lottery will withhold 24% of the payout for federal income tax if the claimant is a U.S. citizen or resident alien; that withholding is applied at the time of payout and reduces the cash a winner receives immediately ^{[1] [2]}. If the prize claimant indicates on the claim form that they are not a U.S. citizen or resident alien, the California Lottery will withhold 30% for federal taxes up front ^{[2] [6]}. California state tax is not withheld by the Lottery at payout — the California Franchise Tax Board and the California Lottery both state that state taxes are not deducted from Lottery prizes ^{[3] [2]}.

2. Why the 24% withholding is not the final word — the gap between withholding and final tax

The 24% figure is a mandated withholding for immediate collection purposes, but the IRS treats lottery winnings as taxable income subject to progressive rates; a large lump-sum windfall can push a winner into the top federal bracket (37%), meaning additional tax beyond the 24% will likely be due when the winner files returns ^{[5] [1] [4]}. News outlets calculating take-home pay for multibillion-dollar Powerball winners illustrate this: initial withholding reduces the cash option substantially, but reporters note an extra tax bite (for example, an additional roughly 13 percentage points to reach the 37% top rate in recent coverage) when final liability is computed ^{[7] [6]}.

3. State tax reality in California — the authoritative view and conflicting claims

Official California sources are clear: California does not tax winnings from the California Lottery and does not withhold state taxes at payout ^{[3] [2]}. That is why comparative tax guides list California among the handful of states that don’t impose a state tax on lottery prizes ^{[8] [4]}. Some third‑party tax guides and calculators sometimes state that California’s progressive income tax can apply to gambling or lottery receipts ^{[9] [10]}; however, those claims conflict with the California Franchise Tax Board’s explicit guidance that California Lottery prizes are not taxed by the state ^[3], so the authoritative state position is no withholding for California Lottery payouts ^[2].

4. Other reductions and practical cautions winners should expect at payout

Beyond federal withholding, Lottery payouts can be reduced for other legally required offsets before the winner pockets cash — examples include collections for delinquent child support, outstanding state or federal tax liens, or other government obligations, which state lotteries commonly deduct or report ^[6]. Winners who opt for a lump sum should be especially mindful that the entire cash option is taxed that year (which can trigger estimated‑tax requirements), while annuity recipients report each installment as income in the year received ^{[1] [5]}. Group wins introduce extra paperwork (Form 5754) to apportion withholding among participants and to document that the claimant is not the sole recipient, a practical matter emphasized by tax guides and the Lottery’s winner handbook ^{[11] [2]}.

5. Bottom line — the immediate takeaway and what winners should plan for

At the time of payout a California Lottery winner can expect an immediate federal withholding of 24% (30% for nonresident aliens) and no California state withholding on California Lottery prizes, but the 24% is only an advance payment of federal tax and many winners will owe more when they file — possibly up to the top marginal rate of 37% depending on total income and filings ^{[1] [2] [5]}. Winners should consult the California Lottery winner handbook and plan with tax and legal advisors because additional offsets (child support, liens) and the choice between lump sum and annuity materially change cash in hand and eventual tax bills ^{[2] [6]}.