The individual prize amount is the determining factor of taxability, not the total amount of Lottery winnings during the year. New Jersey Lottery winnings from prize amounts exceeding $10,000 are taxable. Each company is required to file for a refund of the tax withheld, if applicable. Both taxpayers would be subject to the 5% withholding because the total amount of the prize exceeded $10,000.Ĭompanies that obtain the right to Lottery payments from the winner and receive Lottery payments are also subject to New Jersey withholdings. For example, if two people win a New Jersey Lottery prize of $14,000 and split the proceeds equally, $7,000 of income is taxable to each person and is subject to the 5% withholding rate. New Jersey Income Tax withholding is based on the total amount of the prize won.

8% for Lottery payouts over $10,000, if the claimant does not provide a valid Taxpayer Identification Number.

8% for Lottery payouts over $500,000 and.The withholding rates for gambling winnings paid by the New Jersey Lottery are as follows:

If a prize is taxable (i.e., over $10,000), the entire amount of the payout is subject to withholding, not just the amount in excess of $10,000. The rate is determined by the amount of the payout. New Jersey Income Tax is withheld at an amount equal to three percent (3%) of the payout for both New Jersey residents and nonresidents ( N.J.S.A.

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