Sep 13, 2023 - News

Ask Axios: How do lottery taxes work?

Lottery retailers tout massive jackpots to entice players. Photo: Andrew Spear/Getty Images

Reader Jennifer J. asks: How is the cash flow from Powerball lottery sales handled by the Ohio Taxation Department … is it just added to the overall kitty or is it somehow flagged for specific use?

  • On average, how much money does Ohio make on lottery winners' taxes every year?

👋 Tyler here. Powerball jackpots tend to draw a lot of hype, and you can be sure tax officials are paying attention, too.

State of play: Drawings are held in 45 states and feature a progressive jackpot that grows to stratospheric heights until someone finally hits.

  • Ohio sold $151 million in Powerball tickets last fiscal year.

How it works: Ohio lottery winnings over $600 are taxed as income.

What they're saying: It's difficult to know just how much Ohio's tax coffers benefit from lottery winnings.

  • The Ohio Lottery Commission doesn't track that figure and the Department of Taxation doesn't isolate income taxes generated from the lottery, their spokespeople tell me.
  • Also, there's no special fund for lottery taxes paid.

Yes, but: Ohio Lottery sales — money the state generates from all players — are a different story.

  • After operating expenses, prize pay-outs and sales commissions, the net Powerball proceeds go to the Lottery Profits Education Fund.
  • The state reported paying $1.4 billion to the fund last year and has contributed $31 billion to education causes to date.

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