Complete Guide to Lottery Taxes & Tax Free Lotteries | theLotter Australia
 

All About Lottery Taxes

Will You Pay Tax When You Win the Lottery?

Winning the lottery can make your dreams come true overnight and jackpot prizes often reach astronomical proportions. Before you receive your prize money, however, government tax collectors may claim their share of the prize. In some lotteries (such as the US Powerball and Mega Millions), the advertised jackpots are the prize amounts before the deduction of taxes, while in other lotteries, no taxes are deducted at all. Even so, you may be subject to local taxation. Always check with a tax professional if you come into a large sum of money.

Lottery Taxes Explained

Lottery taxes, like all taxes, are decided by the local/federal government where the ticket is physically purchased. Let's take a closer look at the different types of taxes a player will encounter.

Taxes at source are deducted by the lottery organisation prior to the prize being paid out to the winner. For example, if a player wins a $5 million Mega Millions jackpot, then Mega Millions and the US government will take out 30% of that before the player is given the money. Thus the total prize you receive from theLotter Australia will be the prize post-tax.

Local taxes such as income tax are the responsibility of the individual players, not theLotter Australia. We recommend you consult with a financial advisor and accountant should you win a huge sum of money like a jackpot.

Taxes on Lotteries Offered at theLotter Australia

Below you can see details how tax deductions work in the different lotteries we offer on the site. If you win a lottery prize at theLotter Australia, you will receive an email detailing what lottery taxes have been deducted.

EuroJackpot - Tickets are purchased in Spain and subject to Spanish taxation regulations. There are two tax bands. Tax Band 1: Tax-free up to €40,000. Tax Band 2: Any portion of the prize exceeding €40,000 is subject to a tax rate of 20%. Citizens of most countries other than Spain are entitled to a full tax refund in order to prevent double taxation. Claiming this refund is the sole responsibility of the player and must be done through the Spanish tax authorities. Tax refunds when approved will be issued during the following calendar year.

Spain - EuroMillions - Tickets are purchased in Spain and subject to Spanish taxation regulations. There are two tax bands. Tax Band 1: Tax-free up to €40,000. Tax Band 2: Any portion of the prize exceeding €40,000 is subject to a tax rate of 20%. Citizens of most countries other than Spain are entitled to a full tax refund in order to prevent double taxation. Claiming this refund is the sole responsibility of the player and must be done through the Spanish tax authorities. Tax refunds when approved will be issued during the following calendar year.

US Mega Millions - There are three tax bands. Tax band 1: Tax-free up to $599.99. Tax band 2: Prizes between $600 and $4,999.99 are subject to a 30% tax. Tax band 3: Prices exceeding $5,000 are subject to a tax of 38.82%.

US Powerball - There are three tax bands. Tax band 1: Tax-free up to $600. Tax band 2: Prizes between $600 and $1,499.99 are subject to a 30% tax. Tax band 3: Prizes exceeding $1,500 are subject to a 38% tax.

SuperEnalotto - There are seven tax bands. Tax band 1: Tax-free up to €100. Tax band 2: The portion of the prize between €100.01-€300 is subject to a flat tax of €1.03. Tax band 3: The portion of the prize between €300.01-€500 is subject to a flat tax of €3.10. Tax band 4: The portion of the prize between €500.01-€1,000 is subject to a flat tax of €3.10 and a tax of 20%. Tax band 5: The portion of the prize between €1,000.01 - €5,200.00 is subject to a flat tax of €6.20 and a tax of 20%. Tax band 6: The portion of the prize between €5,200.01 - €52,000.00 is subject to a flat tax of €5.16 and a tax of 20%. Tax band 7: Any portion of the prize exceeding €52,000.01 is subject to a tax rate of 20%.

How You Pay Taxes on Lottery Prizes Won at theLotter Australia

You'll often see the phrase "lottery prizes are subject to taxation at source" in our results pages. This means that the taxes are deducted directly by the lottery organisation and the local and/or federal government where the lottery draws take place. Prizes are paid out to the winners only after all taxes are deducted. theLotter Australia then deposits the full post-tax prize amount in the winner's account. theLotter Australia takes no commission on lottery prizes.

Often taxes deducted at the source are dependent on the amount of money won. The differing tiers are called Tax Bands. On each individual lottery results page, you'll see each tax band written out in the Tax Requirement section of the info table.