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May 21, 2021


Hi, Marlon. If a jackpot winner chooses the annuity option, the lottery invests the money in the jackpot pool from the sale of tickets in the game. The winner then receives annual payments over time that add up to the total annuitized jackpot amount. The annual payments include the amount of money on hand from the sale of tickets plus the amount generated in interest over time. If the winner chooses the lump-sum option, they only receive the amount of money in the jackpot pool from the sale of tickets in the game. The interest money over time would not be part of the picture in that instance because the lottery would not invest the money. It would instead be paid out all at once in a lump-sum amount.

Hi, Steve. State withholding of 5 percent applies to lottery prizes of more than $600 won in Iowa. An additional 24 percent federal withholding applies to lottery prizes of more than $5,000. The withholding is designed to cover the tax impact that a winner will have from winning a prize. But the actual amount the winner will owe in taxes in dependent upon their circumstances outside of winning the lottery. In some instances the withholding will be too much, in other instances, the withholding will not be enough. We encourage all our winners to consult with a tax expert to receive the details about the taxes that will be involved in their instance.

Annual payments ? Does the payments come once a year from the interest of the principal ?

Interesting! Thanks for the info.

What percentage in taxes goes to the state of Iowa. I have read various answers. Some articles say 5% others say Iowa collects the highest bracket percentage which currently sits at 8.53%.

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As the lottery’s vice president of external relations, I’m a member of the senior management team at the Iowa Lottery, where I’ve worked since 1999. I’ve spent my years at the lottery learning as much as I can about all the ins and outs of the lottery industry. I’ll put that knowledge to work here so I can share the behind-the-scenes details with you!