What is the tax on sweepstakes winnings is a common question among winners eager to understand their financial responsibilities. In the United States, sweepstakes winnings are considered taxable income by the Internal Revenue Service. This means that winners must report their earnings on their tax returns and pay taxes based on their income bracket. The federal tax rate can vary, but it often ranges from 10 to 37 percent, depending on the total amount won and the individual’s overall income. Additionally, some states impose their own taxes on winnings, which can further impact the net amount received after taxes.
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