New Jersey residents are subject to both types of tax that must be honored in full. Federal tax laws though will also take a hefty bite out of your lottery winnings with 24-25% going to the Internal Revenue Service. For any lottery winnings exceeding $500,000, as in $500,001, you owe 8% in state tax. A taxpayer needs to use a Taxpayer Identification Number (TIN) which the IRS uses to verify tax obligations.įor amounts between $10,001 and $500,000, you are taxed 5% of your winnings. The amount is taxed under the state gross income tax. So, any winnings that you generate through the lottery that exceed $10,000 have been taxable income since 2009. This is standard procedure, but luckily for you, lottery winnings are charged at a much lower rate compared to online gambling products such as sportsbook and casino games.
For better or for worse, two types of tax apply to your lottery winnings. The first point we wish to cover is how online gambling is taxable income.
