Kentucky Lottery
Kentucky Lottery Tax Calculator
Kentucky’s flat income tax fell to 3.5% for 2026 under House Bill 1, so a Kentucky Lottery prize costs 3.5% in state tax — though the Lottery does not publish how much of it is withheld at claim.
Verified · tax year 2026
Kentucky prize — results
Take-home
68.9% kept of $500,000
Annuity · 30 payments
Year 1 — → year 30 —
| Cash received | $500,000 |
|---|---|
| Federal income tax | −$138,134 |
| Tax to Kentucky | $0 |
| Kentucky tax | −$17,500 |
| Local income tax | $0 |
| You keep | $344,366 |
| Federal withholding (24%) | −$120,000 |
|---|---|
| State withholding | not published |
| Check you receive | $380,000 |
| Still owed when you file | $35,634 |
Data: IRS Rev. Proc. 2025-32 · state agencies, verified · what this leaves out
Four percent last year, three and a half now
KRS 141.020, as amended by the 2025 Regular Session’s HB 1, sets the tax at 4% for 2024 and 2025 and at 3.5% for taxable years beginning on or after January 1, 2026. A $500,000 prize claimed in 2026 therefore carries $17,500 of Kentucky tax for a filer with no other income, against $138,134 of federal tax.
Any further cut for 2027 depends on Kentucky’s statutory revenue triggers and another act of the General Assembly, so no 2027 Kentucky rate is assumed here.
Withholding you should confirm
We could not find the Kentucky Lottery’s state withholding rate on its public claim pages, so the calculator labels it unpublished instead of inventing one. The federal 24% on prizes over $5,000 still applies. If your claim slip shows Kentucky tax withheld, compare it with the 3.5% figure above to see what, if anything, remains.
Players from Tennessee and Indiana who cross into Kentucky should note that Tennessee has no income tax, while Indiana taxes its residents at 2.95% plus county tax.
Kentucky at a glance
| State income tax on winnings | Up to 3.5% |
|---|---|
| Rate table used | 2026 (KRS 141.020 as amended by 2025 HB 1) |
| Lottery | Kentucky Lottery |
| State withholding at claim | Rate not published |
| Scheduled change | HB 1 lets the rate fall again for 2027 only if Kentucky’s revenue triggers are met and the General Assembly acts. |
What Kentucky winners should know
- Kentucky’s flat rate dropped from 4% to 3.5% for tax years beginning January 1, 2026.
Kentucky sources
- HB 1 (2025 Regular Session), amending KRS 141.020 — Kentucky General Assembly
Agency: Kentucky Department of Revenue. † read through a browser session (why). How the math works.
Neighboring states
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