Depending on your other income and the amount of your winnings, your federal tax bracket can go as high as 39.6%. Your lottery winnings might also be subject to state income tax. So depending on where you live, your total tax bill could exceed 50%. You don’t get any capital gains rate break for lottery winnings, nor is there any income averaging to help lower your tax bill. If you win more than $5,000 in the lottery, 28% must be withheld from your winnings for federal income tax purposes. You can do a google search ‘taxes on lottery’ to get more info specific to your situation.