States That Won’t Tax Your Powerball Winnings in 2026

Kelley R. Taylor1 hour ago

0 1 3 minutes read

States That Won’t Tax Your Powerball Winnings in 2026 — (Image credit: Getty Images)

A winning Powerball ticket could change your life overnight. But where you live may determine how much of that jackpot you actually get to keep.

First things first: Federal taxes apply to lottery winnings nationwide. However, state taxes are a different story.

Some states have high Powerball (lottery) taxes. But in some states, lottery winners can avoid state income taxes on their prize entirely — potentially saving thousands, millions, or even tens of millions of dollars on a life-changing jackpot.

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That’s a big deal at a time when lottery prizes continue to grab headlines, including recent Powerball jackpots worth hundreds of millions and even more than $1 billion.

Here are eight states that won’t tax your Powerball winnings.

8 States that don’t tax lottery winnings

Eight U.S. states currently don’t tax lottery winnings. But remember, these states still have to withhold federal taxes from your prize. Here they are.

California

California doesn’t tax California Lottery winnings and has produced some of the largest lottery winners in U.S. history. That includes the record-setting $2.04 billion Powerball jackpot winner from four years ago.

That’s notable since the Golden State imposes one of the nation’s highest income tax rates, with a top marginal rate of 13.3%.

California also has one of the highest sales tax rates in the U.S., and high gas taxes add up for residents.

Florida

Florida also doesn’t tax lottery winnings, so your Powerball prize will only be subject to federal taxes. (That’s good news since a recent $1.58 billion Mega Millions winning ticket was sold in the state.) Florida is also one of nine states that don’t have a personal income tax.

As Kiplinger reported, Florida property tax rates are relatively low compared to the national average, and Gov. DeSantis is pushing to eliminate property taxes in the Sunshine State as soon as next year.

New Hampshire

Your lottery winnings won’t be taxed at the state level in New Hampshire, mainly because the state has no income tax and no sales tax.

New Hampshire does have fairly high property taxes when compared to other states. The Granite State has recently phased out its tax on dividends and interest income.

South Dakota

South Dakota is another state with no personal income tax, so it won’t withhold state tax from your Powerball or other lottery winnings.

The combined state and local sales tax rate in South Dakota is fairly low, but the state’s sales tax applies to groceries and clothing.

Tennessee

Tennessee doesn’t tax Powerball winnings because the state has no income taxes.

And, although Tennessee has one of the highest sales tax rates in the U.S., it has relatively low property tax compared to other states and a generally low cost of living.

Texas

Texas is another state that won’t tax your Powerball lottery winnings. The Lone Star State made lottery headlines in 2025 when a ticket sold in Fredericksburg shared a historic $1.8 billion Powerball jackpot, the second-largest in Powerball history.

Homeowners, however, often face relatively high property tax bills, and Texas’ 6.25% sales tax rate is a bit high compared to other states, and localities can add an additional 2%.