Are lottery winnings subject to state and federal taxes?
A. Yes, as of July 1, 2002, the Hoosier Lottery is required by law to withhold 3.4% for Indiana state income taxes on prizes over $1200 and to withhold 25% for federal income taxes on all prizes over $5,000. Additional income taxes may be owed depending on the individual winner’s tax bracket. If a player wins a Hoosier Lottery prize but resides in another state, taxes for player’s state of residence also may apply. However, the winner may be eligible for a refund of the Indiana taxes paid.
