Mississippi Code Sec. 27-115-43 (the Alyce G. Clarke Mississippi Lottery Law) makes lottery prizes of $600 or more subject to state and federal withholding. MS DOR separately confirms a 3% state withholding rate on gaming winnings (its public notice is worded around casino "gaming establishments"; several tax-prep sources report the same 3% applies to lottery prizes, but no primary MS DOR/Lottery page stating 3% for lottery by name was found — verify with MS DOR or the Mississippi Lottery Corporation before treating as certain). Federal withholding (24%) applies to prizes over $5,000, and prizes of $600 or more are reported to the IRS. Mississippi has a flat individual income tax on income above $10,000 (4% for 2026, with recent legislation continuing to phase the rate down toward 3% by 2030) — confirm the current year's rate with the Mississippi Department of Revenue.
This page is general information, not tax advice. Rates change and personal situations differ — confirm with the Mississippi Lottery Corporation, the IRS, and your state revenue department, or ask a tax professional.
| Prize | Withheld up front | Estimated Mississippi tax (4.0%) | Estimated federal tax (your bracket) |
|---|---|---|---|
| $50 | Nothing withheld (under $600) | $2 | Taxable income — depends on your bracket |
| $500 | Nothing withheld (under $600) | $20 | Taxable income — depends on your bracket |
| $601 | State tax withheld + reported on Form W-2G (no federal withholding in the $600–$5,000 band) | $24 | Taxable income — depends on your bracket |
| $2,500 | State tax withheld + reported on Form W-2G (no federal withholding in the $600–$5,000 band) | $100 | Taxable income — depends on your bracket |
| $10,000 | State tax + 24% federal both withheld | $400 | 24% ($2,400) withheld up front; final amount depends on your bracket |
Yes — withholding is a prepayment, not the final bill. The prize still goes on your federal return (and your state return) as income. If more was withheld than you owe you get the difference back; if less, you pay the rest at filing time.
Generally the state where you bought the winning ticket can tax the prize (you may file a nonresident return there), and your home state taxes it too — but your home state usually gives you a credit for tax paid to the other state, so you are not taxed twice on the same dollars. A tax professional can confirm how your two states handle it.
Prizes of $600 or more are reported to the IRS on Form W-2G. Smaller prizes are not reported automatically, but legally they are still taxable income.
Federal income tax withholding of 24% applies to lottery prizes over $5,000. Below that, nothing is withheld for the IRS up front, but the prize is still taxable.