Lottery winnings and taxes
Prizes are taxable. Losing tickets are deductible only if you clear three conditions, and most people clear none of them.
Winnings are taxable, whatever the size
A lottery prize is income, and you owe tax on it. That holds for a hundred dollars and for a hundred million.
A large win is reported to the IRS on a form called a W-2G, and tax is often withheld before you see the money. A small win with no form is still yours to report.
Losses count only when three things are true
People hope to write off a year of losing tickets against their pay. Almost nobody can, because the deduction has three conditions and it needs all three at once.
You have to itemize. The deduction goes on Schedule A. If you take the standard deduction, as most people do, you deduct nothing here at all.
You need winnings to offset. Losing tickets come off gambling winnings you report, never your ordinary income. If you won nothing, there is nothing to subtract them from, so the answer is zero.
From 2026, only most of the loss counts. For tax years starting in 2026, the deduction is capped at 90 percent of what you lost, and still capped at what you won. Before 2026 it was the full loss, up to your winnings.
Put together, a person who only ever lost deducts nothing, and a person who won some and lost more can offset only up to what they won, and from 2026 only ninety cents on the dollar of it.
Your state may still say no
The rules above are federal. States set their own, and some do not let you deduct gambling losses at all, even in a year the federal return does.
So check your own state before counting on anything, or ask whoever prepares your return.
You need records, not a guess
The IRS expects a record behind the figures: the dates, the amounts wagered, and what you won, not one number written down at the end of the year.
Keep your tickets, or save them here. A saved ticket is a dated record of what you played and what it was worth, which is the log this rule asks for.
Your winnings and wagers, added up
If you won something and you itemize, the useful thing is a total: what you won across the year, and what you wagered, ready for whoever files your return.
MilliCheck+ builds that from the tickets in your wallet. It shows the two totals and the rules on this page, and it never puts a figure on a prize it cannot know, such as a jackpot or a pari-mutuel state. It covers the tickets you saved with us and no others.
This is the rule, not advice
We are not tax advisers and this is not tax advice. It is what the rule says, with the source below, so you can take it to somebody who files returns for a living. If your case is close to the line, that is who to ask.
Sources: the IRS explains gambling income and losses in Topic No. 419. The 90 percent cap for tax years starting in 2026 comes from the 2025 change to the deduction under Internal Revenue Code section 165(d).
Questions people ask
- Are lottery losses tax deductible?
- Rarely. You can deduct them only if you itemize, and only up to what you won that year. Someone who only ever lost deducts nothing.
- Can you write off losing lottery tickets?
- Only against winnings. Losing tickets offset gambling winnings you report, never your ordinary income. With no winnings, there is nothing to write them off against.
- Do you have to itemize to deduct gambling losses?
- Yes. The deduction goes on Schedule A, so taking the standard deduction rules it out. Most people take the standard deduction, which is why most cannot claim these losses.
- How much of my lottery losses can I deduct?
- For 2026, up to 90 percent of what you lost, and never more than what you won. Before 2026 it was the full loss, still capped at your winnings. The 90 percent cap is new for tax years starting in 2026.
- Do I have to report lottery winnings?
- Yes. Prizes are taxable income whatever the size, and a large win is reported to the IRS on a W-2G. You report the winnings even in a year you cannot deduct a single losing ticket.
- Does my state let me deduct lottery losses?
- It depends. Some states follow the federal rules and some do not allow the deduction at all. Check your own state, or ask whoever prepares your return.