Best States to Win the Lottery: 9 Tax-Free States in 2025

The Best States for Lottery Winners

Not all lottery wins are created equal. Where you live when you claim your prize can make a difference of millions of dollars. Here are the states where you can keep the most of your winnings.

States with No Lottery Tax

1. California - The Golden State for Winners

Tax Rate: 0%

California is unique - it's the only state that participates in Powerball AND has no state tax on lottery winnings.

Pros:

• Largest lottery market in the US
• No state tax on any lottery winnings
• Strong player protection laws

Cons:

• High cost of living
• High income tax on other earnings (up to 13.3%)

2. Florida - The Sunshine State

Tax Rate: 0%

Florida has no state income tax at all, making it a paradise for lottery winners.

Pros:

• No state income tax on anything
• Lower cost of living than California
• Large lottery with many games

Cons:

• Hurricane risk
• Hot and humid climate

3. Texas - Everything's Bigger

Tax Rate: 0%

The Lone Star State offers no state income tax and a robust lottery system.

Pros:

• No state income tax
• Lower cost of living
• Large, diverse state
• Strong economy

Cons:

• Extreme weather (heat, tornadoes)
• Limited public transportation

4. Washington - Pacific Northwest Paradise

Tax Rate: 0%

Washington State has no income tax and beautiful scenery.

Pros:

• No state income tax
• Beautiful natural environment
• Strong tech economy

Cons:

• High cost of living in Seattle area
• Rainy weather
• High sales tax (up to 10.5%)

5. Wyoming - Low Key Living

Tax Rate: 0%

Wyoming is a small state with big benefits for lottery winners.

Pros:

• No state income tax
• Very low cost of living
• Low population (privacy)
• Beautiful landscapes

Cons:

• Limited amenities
• Harsh winters
• Remote location

6. South Dakota - Hidden Gem

Tax Rate: 0%

Often overlooked, South Dakota offers excellent tax benefits.

Pros:

• No state income tax
• Very low cost of living
• Low crime rates
• Trust-friendly laws

Cons:

• Extreme winters
• Limited entertainment options
• Small population

7. Tennessee - Music City Money

Tax Rate: 0%

Tennessee has no income tax on wages or lottery winnings.

Pros:

• No income tax on wages
• Moderate cost of living
• Music and entertainment scene
• Central location

Cons:

• Sales tax is high (up to 9.75%)
• Some areas prone to tornadoes

8. New Hampshire - Live Free

Tax Rate: 0%

New Hampshire's motto "Live Free or Die" extends to lottery taxation.

Pros:

• No state income tax
• No sales tax
• Beautiful New England location
• Close to Boston

Cons:

• Higher property taxes
• Cold winters
• Higher cost of living

9. Delaware - Small but Mighty

Tax Rate: 0% on lottery only

Delaware specifically exempts lottery winnings from state tax.

Pros:

• No lottery tax
• No sales tax
• Close to major cities
• Business-friendly

Cons:

• Small state
• Delaware does have income tax on other earnings

Special Mention: Puerto Rico & US Virgin Islands

Both U.S. territories participate in Powerball and have 0% tax on lottery winnings, plus unique tax benefits for residents.

Comparison Chart

State	Lottery Tax	Income Tax	Sales Tax	Cost of Living
California	0%	1-13.3%	7.25%+	High
Florida	0%	0%	6%+	Medium
Texas	0%	0%	6.25%+	Medium
Washington	0%	0%	6.5%+	High
Wyoming	0%	0%	4%	Low
South Dakota	0%	0%	4.5%	Low
Tennessee	0%	0%	7%+	Medium
New Hampshire	0%	0%	0%	High
Delaware	0%	2.2-6.6%	0%	Medium

Can You Move to Avoid Taxes?

Technically yes, but it's complicated:

Things to Consider:

Establish residency BEFORE winning - Moving after you win looks suspicious to the IRS

True residency required - You need to actually live there, not just claim an address

State audits - High-value winners may face scrutiny

Time requirements - Most states require 6-12 months of residency

Warning Signs Tax Authorities Look For:

• Changing address right after winning
• Maintaining primary home in high-tax state
• Work location in different state
• Children's schools in different state
• Voting registration inconsistencies

Best Strategy for Winners

Don't rush to claim - You typically have 180 days to 1 year

Consult professionals - Tax attorneys, CPAs, financial advisors

Consider all factors - Taxes aren't everything (family, job, lifestyle)

Plan for the long term - One-time savings vs. ongoing quality of life

Conclusion

While tax-free states offer significant savings, the best state for YOU depends on your personal circumstances. A $100 million jackpot will change your life regardless of whether you pay 0% or 8% in state taxes.

The most important thing? Play responsibly and enjoy the dream!

Check out our state pages for detailed information about each state's lottery rules and regulations.