Arizona Lottery
Arizona Lottery Tax Calculator
Arizona taxes every dollar of a lottery prize at its single 2.5% rate, and the Arizona Lottery withholds exactly that 2.5% from prizes large enough to trigger federal withholding.
Verified · tax year 2026
Arizona prize — results
Take-home
69.9% kept of $500,000
Annuity · 30 payments
Year 1 — → year 30 —
| Cash received | $500,000 |
|---|---|
| Federal income tax | −$138,134 |
| Tax to Arizona | $0 |
| Arizona tax | −$12,500 |
| Local income tax | $0 |
| You keep | $349,366 |
| Federal withholding (24%) | −$120,000 |
|---|---|
| State withholding | −$12,500 |
| Check you receive | $367,500 |
| Still owed when you file | $18,134 |
Data: IRS Rev. Proc. 2025-32 · state agencies, verified · what this leaves out
A flat rate makes the withholding nearly the final answer
Since tax year 2023 Arizona has used one rate, 2.5%, on all taxable income. A.R.S. § 43-405 tells the Arizona Lottery to withhold at that highest rate from any prize the federal rules already require withholding on, which in practice means prizes over $5,000. For a $500,000 Fantasy 5 or Powerball prize, the Lottery holds back $12,500 for Arizona and $120,000 for the IRS, and the check is $367,500.
Arizona’s final bill on that prize is $12,500, so the state side is essentially settled at the counter. The federal side is not: a single filer with no other income still owes about $18,134 more at filing, because the 24% federal withholding is well under the 35% and 37% brackets a half-million-dollar year reaches.
Privacy and setoffs before you are paid
Arizona is one of the states that shields large winners. Under A.R.S. § 5-573, the name of anyone paid $100,000 or more stays confidential on request, and even without a request it is withheld for 90 days. The city and county you live in are not confidential. Separately, every prize of $600 or more is checked against debts owed to the state — unpaid child support, for example — and reduced before payment.
Arizona at a glance
| State income tax on winnings | Up to 2.5% |
|---|---|
| Rate table used | 2026 |
| Lottery | Arizona Lottery |
| State withholding at claim | 2.5% over $5,000 |
What Arizona winners should know
- A.R.S. § 5-573 keeps the name of a winner of $100,000 or more confidential on request (and for 90 days automatically); the city and county of residence are still public.
- Prizes of $600 or more are checked against debts owed to the state and can be reduced by a setoff before you are paid.
- Because Arizona taxes all income at one 2.5% rate, the 2.5% the Lottery withholds is normally close to the final Arizona bill on the prize.
Arizona sources
- Withholding Tax — Individual — Arizona Department of Revenue
- A.R.S. § 43-405 — Extension of withholding to gambling winnings — Arizona Legislature
- A.R.S. § 5-573 — Prize fund; setoff; prizewinner confidentiality — Arizona Legislature
Agency: Arizona Department of Revenue. † read through a browser session (why). How the math works.
Neighboring states
California · Nevada · New Mexico · Utah · Colorado