Which US states do not tax lottery prizes?

1. Which states don’t tax lottery winnings — the short list

Mainstream reporting and tax guides repeatedly identify the same eight states as imposing no state income tax on lottery prizes: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming ^{[1] [2] [3]}. Multiple outlet examples include CNBC’s December 2024 and March 2024 features and aggregated tax guides that list the eight states together ^{[4] [1]}.

2. What “don’t tax” actually means in practice

“Don’t tax” in these reports generally means the state won’t impose a state-level income tax on the prize, so winners there aren’t subject to a state lottery tax on top of federal taxes ^{[1] [5]}. Reporting also distinguishes withholding (what lotteries automatically hold when paying a prize) from final tax liability; in the listed states you typically won’t face additional state withholding on the prize ^{[3] [2]}.

3. Federal taxes still apply — and can be bigger

Every source makes clear federal tax obligations remain: large lottery prizes trigger federal withholding (commonly cited as 24% or the federal withholding floor) and winners will likely owe more when filing, often reaching the top federal bracket (reported as up to 37% in examples) ^{[1] [3]}. CNBC and other outlets stress that federal taxes usually represent the largest single deduction from a jackpot ^[1].

4. Out-of-state purchases and credits can complicate outcomes

If you buy a winning ticket out of state, the state where you live or where you bought the ticket may seek withholding or tax; many states offer credits for taxes paid to other states, but rules vary. WorldPopulationReview and CNBC note that nonresident taxation rules can produce unexpected withholding or double-collection risks depending on the jurisdictions involved ^{[3] [1]}.

5. State withholding rates vary widely — and some sources emphasize exceptions

Aggregators and tax analyses show state withholding ranges from zero up to double-digit rates in certain local jurisdictions (e.g., New York City’s local tax effects) and note a handful of states (including Delaware, Pennsylvania in some older or specific contexts) appear in differing lists depending on whether the metric is “withholding” or “income tax” ^{[6] [7]}. The Tax Foundation points out that “withholding” and permanent tax liability are not identical and flags Delaware and Pennsylvania in different withholding contexts ^[6].

6. Why sources converge — and where nuance remains

Multiple outlets use the same baseline fact pattern (states without a personal income tax or that explicitly exempt lottery prizes) which explains the convergence on eight states; coverage from Kiplinger, CNBC, WorldPopulationReview and money guides repeats the list ^{[2] [1] [3] [5]}. However, nuance remains: some older or specialty pieces list different groupings when they treat withholding rules, municipal taxes, or unusual state statutes differently ^{[6] [7]}.

7. Practical advice reporters and tax guides give to winners

Coverage uniformly recommends winners consult a tax professional and consider residency, where the ticket was purchased, and payout choice (lump sum vs. annuity), because those choices and residency rules determine final federal and state obligations and the size of withholdings ^{[1] [4]}. CNBC explicitly recommends hiring tax counsel to navigate state credits and nonresident withholding ^[1].

8. Limitations and what the sources do not say

Available sources do not mention any 2025-2026 law changes that would alter the eight-state list; they also do not provide authoritative state-by-state statutory citations in these summaries, relying instead on tax guides and reporting ^{[2] [1] [3]}. For a legally binding determination, state statutes and the relevant lottery agency rules should be consulted directly — that level of primary-source legal detail is not present in these articles ^[6].

If you want, I can (a) compile direct links to each cited article above for your reference, or (b) produce a concise checklist of steps a hypothetical jackpot winner should take (residency review, withholding expectations, payout choice, and professional advisers) referencing the same sources.