The winner of a $100,000 lottery prize would have 25 percent, or $25,000, withheld for federal income taxes. In 34 states, the prize would also be subject to state income taxes ranging from 3.4 percent to 10.8 percent, according to Zacks Investment Research.
The amount withheld may not be the actual tax owed on the prize. That would depend on income, deductions and credits reported by the taxpayer. Lottery winnings are shown on federal Form 1040, line 21, as other income, according to the Internal Revenue Service, and do not get a special tax rate. Excess withholding is refunded or underwithheld taxes paid, when the tax return is filed.