Iowa State Income Tax Rate on Lottery Winnings 2026 Calculator
The Iowa state income tax rate on lottery winnings 2026 is 6%. This calculator shows you your exact after-tax take-home from Powerball, Mega Millions, and other Iowa lottery games, including both federal and state taxes.
Iowa's 6% State Tax on Lottery Winnings
Iowa imposes a flat 6% state income tax on all lottery winnings. On a $60 million lump-sum jackpot, this 6% equals $3.6 million in state taxes. Iowa's 6% places it in the middle tier nationally. States like Colorado and Michigan are lower (4%), while Hawaii, Maryland, and Minnesota are higher (9%). No-tax states save winners millions.
Total Tax Burden: Federal (37%) + Iowa (6%) + Withholding Gap
On a $100 million advertised jackpot: (1) Lump sum is ~60% = $60 million. (2) Federal tax at 37% = $22.2 million. (3) Iowa state tax at 6% = $3.6 million. (4) Total taxes = $25.8 million. (5) Federal withholding already taken = $14.4 million (24%). (6) Additional tax due by April 15th = $11.4 million. You'd take home roughly $34.2 million—a 66% reduction from the advertised jackpot.
Iowa's Agricultural State and Lottery Funding
The Iowa Lottery generates revenue for state education and programs. Iowa's economy, rooted in agriculture and manufacturing, relies on taxation to fund schools and public services. The 6% lottery tax is part of Iowa's revenue model.
Federal Withholding Gap and Iowa's State Withholding
When you claim an Iowa lottery prize: (1) Federal withholding of 24% is deducted (IRS-mandated). (2) Iowa withholds 6% for state taxes. Your actual federal liability is 37%, leaving a 13% federal gap. The $3.6 million Iowa state tax is already deducted at payment.
Lump Sum vs. Annuity: Iowa Tax Implications
Iowa taxes both payout types at 6%. A lump sum means a one-time large federal tax hit (37%). An annuity spreads payments over 30 years, potentially helping manage federal brackets.
Iowa Among Midwest States: Tax Comparison
Iowa's 6% is moderate for the Midwest. Indiana (3%), Ohio (3%), and Illinois (5%) are lower. Wisconsin (8%) and Minnesota (9%) are higher. Iowa sits in the middle tier regionally.
Tax Planning for Iowa Lottery Winners
If you win an Iowa lottery prize: (1) Don't claim immediately—consult a tax attorney and CPA first. (2) Calculate your federal tax gap ($11.4 million on our example). (3) Arrange financing to cover the gap. (4) Understand Iowa's 6% will be automatically withheld. (5) Decide between lump sum and annuity. (6) Consider privacy structures if permitted. (7) Plan post-claim investments. (8) Maintain Iowa residency to preserve tax treatment.
Iowa Lottery Games and Tax Treatment
The Iowa Lottery offers Powerball, Mega Millions, Iowa Lotto, Pick games, and scratch-offs. Iowa's 6% state tax applies uniformly to all lottery prizes.
Iowa Lottery Tax FAQ
Q:What is Iowa's state tax rate on lottery winnings?
Iowa imposes a flat 6% state income tax on all lottery prizes, withheld by the lottery at payment and in addition to federal taxes.
Q:What's the total tax rate on Iowa lottery winnings?
Federal tax is 37% plus Iowa's 6%, totaling 43%. With the federal withholding gap (13%), total tax burden is typically 40-43% of your lump-sum amount.
Q:Is Iowa's 6% tax the same for lump sum and annuity?
Yes. Iowa taxes both at 6%. Your decision should focus on federal tax implications and personal financial goals.
Q:Can I reduce Iowa's 6% lottery tax?
No. The 6% is mandatory and will be automatically withheld. Strategic federal tax planning can help optimize your overall situation.
Q:If I move out of Iowa after winning, do I still owe the 6%?
If you claimed the prize in Iowa, yes—the 6% applies to that win. Moving doesn't eliminate that obligation for past prizes.
Q:How does Iowa compare to neighboring states?
Iowa's 6% is higher than Indiana (3%), Ohio (3%), and Illinois (5%), but lower than Wisconsin (8%) and Minnesota (9%). Iowa is moderate regionally.
Q:What does Iowa use lottery tax revenue for?
Iowa lottery revenue funds state education and public programs throughout the state.