No, New Hampshire does not tax lottery winnings. The state has no broad personal income tax, and its old interest and dividends tax was fully repealed effective January 1, 2025, so nothing is withheld or owed to New Hampshire on a prize of any size.1NH Department of Revenue Administration. Interest and Dividends Tax Federal tax is a different story. The IRS treats lottery prizes as ordinary income, with 24% withheld upfront on larger wins and a final rate that can reach 37% depending on your total income for the year.
Why New Hampshire Takes Nothing
New Hampshire does not impose an income tax on wages, lottery prizes, or any other personal earnings. The interest and dividends tax under RSA 77, the last remaining form of personal income taxation in the state, was repealed for all taxable periods beginning after December 31, 2024.1NH Department of Revenue Administration. Interest and Dividends Tax Even when that tax existed, it reached only investment income, never lottery prizes.
So whether the prize is $100 on a scratch ticket or a nine-figure Powerball jackpot, the New Hampshire Lottery Commission withholds nothing for the state. Your only tax obligation on the winnings runs to the federal government.
Federal Withholding at the Time of Payout
Federal law requires any state-conducted lottery to withhold 24% of net winnings (the prize minus the ticket cost) once those net winnings exceed $5,000.2Office of the Law Revision Counsel. 26 U.S. Code 3402 – Income Tax Collected at Source The New Hampshire Lottery Commission handles the withholding before cutting your check.
A quick example. Win $10,000 on a $2 ticket, and net winnings are $9,998. That clears the $5,000 line, so the commission withholds 24% of the prize and forwards it to the IRS. You walk away with the rest. For prizes with net winnings of $5,000 or less, no automatic withholding happens, but the money is still taxable and still has to be reported on your return.
What You Will Actually Owe
The 24% withheld is a down payment, not a settlement. Lottery winnings stack on top of your other income, and your real rate depends on where that combined total lands. The 2026 federal brackets for a single filer:3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- 10% up to $12,400
- 12% from $12,401 to $50,400
- 22% from $50,401 to $105,700
- 24% from $105,701 to $201,775
- 32% from $201,776 to $256,225
- 35% from $256,226 to $640,600
- 37% over $640,600
For married couples filing jointly, the 37% rate kicks in above $768,700.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 A large jackpot pushes most of the prize into the top bracket, which means the 24% already withheld will not cover the full bill. You settle the difference when you file, or sooner through estimated payments.
Lump Sum or Annuity
Major jackpots usually let you choose between a single lump sum (the “cash option”) and an annuity paid over roughly 30 years. The lump sum is substantially smaller than the advertised jackpot, typically around half, because the headline number is the sum of all annuity payments.
Taking the lump sum pulls the entire amount into one tax year, which on a large prize almost guarantees the top 37% rate applies to most of the winnings. The annuity spreads income across decades, so each payment is taxed in the year received. That can leave individual payments in lower brackets depending on your other income, though sizeable annuity checks from a major jackpot will still reach the top. Either way, the federal tax is coming. The choice is about timing and cash flow.
Form W-2G and Your Return
The New Hampshire Lottery Commission issues IRS Form W-2G to document the prize and any federal withholding. Starting in 2026, the reporting threshold for gambling winnings rose to $2,000, up from $600, and will adjust annually for inflation after that.4Internal Revenue Service. Instructions for Forms W-2G and 5754 (01/2026) For lottery prizes, a W-2G is required when winnings hit the $2,000 threshold and are at least 300 times the wager. A copy goes to you and a copy goes to the IRS.
Prizes below the W-2G threshold are still taxable. You are required to report all gambling income on your federal return whether or not a W-2G was issued.5Internal Revenue Service. Topic No. 419, Gambling Income and Losses
Winnings go on Form 1040 through Schedule 1. The 2025 Schedule 1 has a dedicated line for gambling income (line 8b), which rolls into the schedule’s total additional income on line 10 and then into your 1040.6Internal Revenue Service. 2025 Schedule 1 (Form 1040) – Additional Income and Adjustments to Income The withholding the commission already sent to the IRS is credited in the federal income tax withheld section of your 1040. If withholding covered more than you owe, you get a refund. If it fell short, which is common on large prizes, you pay the balance by the filing deadline, using Form 1040-V as a payment voucher if you need one.7Internal Revenue Service. About Form 1040-V, Payment Voucher for Individuals
Offsetting Winnings With Gambling Losses
Gambling losses from the same tax year can be deducted, but only up to the amount of your gambling winnings, and only if you itemize on Schedule A rather than take the standard deduction. Losses cannot reduce your other income or produce a net loss.5Internal Revenue Service. Topic No. 419, Gambling Income and Losses
To claim the deduction, the IRS expects a diary or record of your winnings and losses backed by receipts, tickets, statements, or similar documentation.5Internal Revenue Service. Topic No. 419, Gambling Income and Losses Save losing tickets, track wagers, and keep records throughout the year. Without proof, the deduction can be disallowed.
Estimated Tax Payments on a Large Prize
When the 24% withheld is well short of the 37% you will ultimately owe, waiting until April to pay the difference can trigger a penalty. The IRS generally expects estimated payments if you will owe at least $1,000 after withholding and refundable credits, and your withholding will cover less than 90% of your 2026 tax liability, or less than 100% of your 2025 tax (110% if your 2025 AGI exceeded $150,000).8Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals
Estimated payments for 2026 are due April 15, June 15, and September 15 of 2026, and January 15, 2027.8Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals Win a large prize mid-year and the right move is to estimate the total liability and send a payment by the next quarterly deadline. Underpaying during the year can bring penalties and interest.9Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax
Office Pools and Group Wins
If the ticket belongs to a group, each person’s share has to be reported separately. The person who claims the prize completes IRS Form 5754, listing the name, address, taxpayer identification number, and share for every member of the pool.10Internal Revenue Service. Form 5754 The commission then issues a separate W-2G to each winner, and each person reports and pays tax only on their own share.
Skip this and the IRS treats the full prize as income to whoever claimed it. Handing shares to the other members later can then look like a taxable gift. Filling out Form 5754 at the time of the claim prevents the problem.
If You Live in Another State
Buying the ticket in New Hampshire does not shield you from your home state’s tax. New Hampshire withholds nothing, and you will not need to file a New Hampshire return, but most states with an income tax require residents to report all income from any source, including out-of-state lottery prizes. Residents of other no-income-tax states such as Florida, Texas, or Wyoming owe nothing at the state level, same as a New Hampshire resident.
Nonresident Alien Winners
Winners who are not U.S. citizens or permanent residents are subject to a higher federal withholding rate. The IRS generally requires 30% withholding on gambling winnings paid to nonresident aliens, rather than the 24% for U.S. persons.11Internal Revenue Service. Publication 515 (2025), Withholding of Tax on Nonresident Aliens and Foreign Entities A tax treaty between the United States and your country of residence may lower or eliminate that rate, so a nonresident alien winner should consult a tax professional familiar with treaty provisions before claiming the prize.