California is one of the only US states that completely exempts state lottery winnings from state income tax. Here's exactly how the §17131.4 exemption works, what federal tax still applies, and how California stacks up against the highest-tax lottery states.
California Revenue and Taxation Code §17131.4 explicitly excludes California State Lottery prizes from gross income for state income tax purposes. The exemption covers every CA Lottery game:
The exemption applies to the prize itself, not the winner. That means even a non-resident who buys a winning ticket in California pays zero California state income tax on it.
California's exemption only covers state tax. The IRS treats lottery winnings as ordinary income everywhere in the US:
If you live in Nevada, Texas, Arizona, Oregon, or anywhere else and you bought a winning California ticket, you owe no California state tax — the §17131.4 exemption applies to the prize. You also don't file a California non-resident return for the lottery winnings.
Your home state, however, will tax the winnings on your resident return if it has an income tax (Nevada, Texas, Florida, and Washington don't). Because California collected no state tax, there's no credit available to offset your home-state liability.
The exemption is jurisdictional. If you live in California but bought a winning ticket while traveling in Oregon, Arizona, or any other state, the §17131.4 exemption doesn't apply — that prize is an out-of-state lottery win.
| State | State withholding | Top state rate on lottery | Local tax? |
|---|---|---|---|
| California | 0% | 0% | None |
| New York | 10.9% | 10.9% | NYC: +3.876% |
| New Jersey | 5% / 8% tiered | 10.75% | None |
| Oregon | 8% | 9.9% | None |
| Texas / Florida | 0% | 0% | None |
California joins Texas, Florida, Washington, South Dakota, Tennessee, Wyoming, and New Hampshire on the short list of US states that take $0 in state tax from lottery winners — but California is unique because it has a 13.3% top state income tax bracket that would have applied if the §17131.4 carve-out didn't exist.
Because California adds zero state tax either way, the lump-sum-vs-annuity decision in CA is purely federal:
See our full lump-sum vs annuity guide for the year-by-year federal math.
Plug in your prize amount and select California to see your federal-only breakdown, with state tax automatically zeroed under §17131.4.
Open the lottery tax calculatorNo. California is one of the few states that fully exempts California State Lottery prizes from state income tax. The exemption is written into the California Revenue and Taxation Code §17131.4, so SuperLotto Plus, Mega Millions, Powerball, Fantasy 5, and Scratchers prizes won in California are not taxed by the State of California. Federal tax still applies.
No state withholding is taken on California Lottery prizes — not at $600, not at $5,000, not at $1,000,000. Only federal withholding (24%) is taken on prizes over $5,000 by the California Lottery before you receive your check.
The exemption only covers California State Lottery winnings. If you bought a winning ticket in Nevada, Oregon, Arizona, or any other state, that state's lottery and tax rules apply at the source. You'll also report it as taxable income on your California return — but California grants a credit for tax paid to the other state on your CA Form 540, Schedule S, so you're not double-taxed.
No. The §17131.4 exemption applies to the prize itself, regardless of where the winner lives. A Nevada or Texas resident who hits a SuperLotto jackpot pays zero California state income tax on it. Their home state, if it has an income tax, will tax it on their resident return.
The IRS withholds a flat 24% on any single lottery prize over $5,000. Lottery winnings are taxed as ordinary federal income, so a multimillion-dollar jackpot lands you in the top 37% federal bracket — meaning roughly 13% more federal tax owed at filing beyond the 24% already withheld.
Because California adds zero state tax either way, the lump-sum vs annuity decision in CA is purely a federal-bracket and time-value-of-money question. An annuity spreads income across 20–30 years, keeping more of each payment below the top 37% federal bracket. A lump sum gives you the cash now but concentrates the entire prize into one tax year at the top rate.
No. California requires the winner's name and the name of the retailer that sold the winning ticket to be public record. Some winners use a blind trust or LLC to claim, but the trustee's identity is still disclosed. See our anonymity guide for the states that do allow fully anonymous claims.
This guide is general information, not tax advice. California's §17131.4 exemption and federal brackets can change — confirm with the California Franchise Tax Board, the IRS, or a licensed tax professional before filing.