News writer
When lottery jackpots reach historic levels, the focus seems to stay on the winner. I mean, rightfully so. However, state governments are also getting a financial boost through income tax withholdings and elevated ticket sales because of these billion-dollar Powerball and Mega Millions jackpots. Arkansas recently showed us how noticeable that impact can be, but it's far from the only state to feel the effect.
A $32 million tax surge for Arkansas
For its January revenue, the state of Arkansas showed net available general revenue of $672.4 million. This beat forecasts by more than $57 million. State officials attributed roughly $32 million of that total directly to income tax withholding from the $1.82 billion Powerball jackpot win that came in December.
In Arkansas, they tax lottery winnings as ordinary income. This lump-sum payment triggered an immediate influx of tax revenue. That single jackpot win shifted the state's monthly revenue outlook and contributed to a revised fiscal-year surplus projection of $334.4 million.
Nine-figure tax payments in California
California has seen multiple billion-dollar jackpot wins in recent years, such as the Powerball win by Edwin Castro. California has a progressive income tax structure, which amplifies the fiscal impact of these big jackpot wins.
For that $2.04 billion Powerball jackpot win by Castro in November 2022, it resulted in a lump-sum payout of approximately $997.6 million. With California's top marginal income tax rate at 13.3%, analysts estimated the state was able to collect over $130 million in income taxes from that single prize.
In October 2023, California experienced the same thing when a $1.77 billion Powerball jackpot was won, and again in December 2024 with the $1.27 billion Mega Millions jackpot win. This reinforces how these huge lottery wins can have meaningful effects on state revenue collections in high-tax states.
Big wins from sales
Not all states benefit from income tax. Florida, which does not tax lottery winnings, still had a big fiscal impact after the $1.6 billion Mega Millions jackpot in August 2023.
This benefit came from record ticket sales, retailer commissions, and increased transfers to education funding tied to lottery revenue. While there was no direct income tax windfall that occurred, lottery officials reported one of the strongest sales periods in the game's history.
Texas had the same thing happen after sharing the $1.79 billion Powerball jackpot in September 2025. Texas also doesn't have state income tax, so it benefited from elevated sales volume and retailer activity during the jackpot run.
Bigger impact in smaller states
For smaller states, the impact can be even more pronounced. In January 2023, Maine had a $1.35 billion Mega Millions jackpot.
That big win produced an estimated $100 million-plus in state income tax revenue. Maine has a top tax rate of 7.15%. They have a smaller state budget, so that single payment represented a huge one-time boost.
In March 2024, New Jersey had a $1.13 billion Mega Millions jackpot winner. State taxes applied to the lottery winnings, which added tens of millions in immediate revenue.
Sure, these billion-dollar jackpots don't rewrite state budgets, but they can dramatically shift monthly and quarterly revenue reports. These gains are one-time events for states, but they almost immediately feel the benefits.
Enjoy playing the lottery, and please remember to play responsibly.
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