Alabama · no state lottery
Alabama Lottery Tax Calculator
Alabama sells no lottery tickets, but it taxes its residents’ winnings from everywhere else at 2% to 5% — and the 5% rate starts after only $3,000 of taxable income.
Verified · tax year 2026
Alabama prize — results
Take-home
63% kept of $1,000,000
Annuity · 30 payments
Year 1 — → year 30 —
| Cash received | $1,000,000 |
|---|---|
| Federal income tax | −$320,000 |
| Tax to Florida | $0 |
| Alabama tax | −$49,960 |
| Local income tax | $0 |
| You keep | $630,040 |
| Federal withholding (24%) | −$240,000 |
|---|---|
| State withholding | $0 |
| Check you receive | $760,000 |
| Still owed when you file | $129,960 |
Data: IRS Rev. Proc. 2025-32 · state agencies, verified · what this leaves out
Crossing the line to buy a ticket
Most Alabamians who win a draw game bought the ticket in Florida, Georgia, Mississippi or Tennessee. Where you buy it decides who withholds; where you live decides who taxes it in the end. Florida and Tennessee have no income tax, so a ticket from either brings no second state into the picture. Georgia and Mississippi do have income taxes; a prize won there can draw their tax as well, and how much of it Alabama lets you credit is a question for the Alabama return, not the lottery counter.
Take a $1,000,000 Match-5 prize on a Florida ticket, single filer, no other income. The IRS takes about $320,000 once the return is filed, Florida takes nothing, and Alabama’s three brackets add $49,960. What is left is $630,040. Because Florida withholds no state tax, the whole Alabama bill is still unpaid when the check clears.
Why the bracket table hardly matters here
Alabama’s schedule is short: 2% on the first $500, 4% on the next $2,500, and 5% on everything above $3,000 for single filers, heads of family and separate filers. Married couples filing jointly get double those breakpoints. On any prize worth chasing, the blended rate is a hair under 5%, so “five percent of the prize” is a sound rule of thumb for budgeting the Alabama share.
Casino winnings follow the same table. The Department of Revenue’s review of the 2025 federal tax law marks the new federal 90% cap on gambling losses as not tied to Alabama law, so read its guidance before assuming your Alabama return mirrors the federal Schedule A.
Alabama at a glance
| State income tax on winnings | Up to 5% |
|---|---|
| Rate table used | 2026 (statutory rates) |
| Lottery | None — tickets are bought in other states |
| State withholding at claim | No state lottery |
What Alabama winners should know
- Alabama has no state lottery, so Powerball and Mega Millions tickets cannot be bought here; a resident who wins with a ticket bought in Georgia, Tennessee, Florida or Mississippi still reports the prize on the Alabama return.
- Alabama’s top 5% rate starts at just $3,000 of taxable income ($6,000 joint), so in practice every dollar of a large prize is taxed at 5%.
- The Alabama Department of Revenue lists the federal 90% wagering-loss change under its One Big Beautiful Bill review as "Tied to Federal: No" — check its guidance before assuming Alabama copies the federal casino-loss limit.
Alabama sources
- What is Alabama’s Individual Income Tax Rate? — Alabama Department of Revenue
- Mega Millions — Where to Play — Mega Millions consortium
- The One, Big, Beautiful Bill Act — Analysis and Tax Provisions (updated 11/10/2025) — Alabama Department of Revenue
Agency: Alabama Department of Revenue. † read through a browser session (why). How the math works.
Neighboring states
Florida · Georgia · Mississippi · Tennessee