Pennsylvania lottery winners now subject to state tax on prizes

Jul 20, 2016, 10:43 am (67 comments)

Pennsylvania Lottery

By Todd Northrop

The small number of states that don't tax lottery prizes has just shrunk by one state.

Pennsylvania lawmakers approved levying new taxes Wednesday on a variety of different things — including lottery prizes — to help support the $31.5 billion state budget that went into effect earlier this week.

The tax bill was approved by a 116-75 vote in the House and 28-22 vote in the Senate. Democrat Gov. Tom Wolf quickly signed the tax bill and related bills to complete the budget process into law. Lawmakers went home for the summer.

The action marks the resolution of nearly two weeks of behind-the-scenes haggling to come up with needed revenue sources after lawmakers approved the budget bill for fiscal 2016-17 on June 30.

As a result of the legislation, Pennsylvania lottery winnings will be subject to the state's 3.07 percent state personal income tax. It is unknown at this time how much of that tax will be withheld at the time of prize payout.

In addition to the new lottery taxes, the bill adds other revenue-generating measures, including:

  • Increases the state cigarette tax by $1 to $2.60 a pack effective Aug. 1
  • Imposes a 55-cents-an-ounce tax on roll-your-own and smokeless tobacco
  • Adds a 40 percent wholesale tax on electronic cigarettes and other vaping devices
  • Increases a state bank shares tax
  • Extends the state's 6 percent sales tax to digital downloads, including video, streaming video, books, games, music apps and satellite radio effective Aug. 1
  • Closes a loophole that allowed retailers to keep 1 percent of tax for themselves
  • Allows consumers to buy wine in supermarkets
  • Increases the state tax on casinos' gross revenue from table games by 2 percent

The budget is also being shored up by a number of one-time transfers among state funds and a $200 million five-year loan from a state malpractice liability fund for doctors. A tax amnesty program is also being instituted in order to bring in additional past due taxes.

Lottery Post Staff

Comments

rcbbuckeye's avatarrcbbuckeye

Well, well.

The Gov and lawmakers took a poop on their citizens and hightailed it on home.

noise-gate

Quote: Originally posted by rcbbuckeye on Jul 20, 2016

Well, well.

The Gov and lawmakers took a poop on their citizens and hightailed it on home.

l just hope that California does not follow suit.

music*'s avatarmusic*

 The power to tax is the power to destroy. 

 The legislature may be up for re-election in November. They will see if the voters notice these taxes.

 Noise-gate, I agree with you about our California. Lotteries are a way to increase the States income. Why hinder that mission?

Raven62's avatarRaven62

Are the Lawmakers Exempt from the Lottery Winnings Income Tax?

WinWinChicDin

If i could be anonymous....I would not really care. But like always, they take without giving

dpoly1's avatardpoly1

Puke

Pennsylvania is The State Of Corruption!

edmunddantes13

Hey... look if you took the annuity out as a PA resident, it's time to move to a new state or end up with less.

 

One of the reasons the cash option is usually better. You know the tax situation now, and you can arrange the future income streams to minimize your taxes.

dpoly1's avatardpoly1

Quote: Originally posted by edmunddantes13 on Jul 20, 2016

Hey... look if you took the annuity out as a PA resident, it's time to move to a new state or end up with less.

 

One of the reasons the cash option is usually better. You know the tax situation now, and you can arrange the future income streams to minimize your taxes.

I Agree!

 with these words of wisdom!

I'll bet they still try to tax you if you move!

This was passed with the help of RINO Dave Reed!

TheMeatman2005's avatarTheMeatman2005

This says it all

TheGameGrl's avatarTheGameGrl

Our townhall meeting had this as a topic of discussion back in November. Signatures were presented to thwart off this tax. Guess our representatives paid no mind to it. 

Can someone advise if this is retroactive to payouts commencing from january 2016? 

I recall New Jersey pulling this stunt and each year the taxes increased .....

Thank you PA for yet another tax to dig out the mismanaged budget projection. !

Now ya gotta PAY to win. !

sully16's avatarsully16

The Wolf is knocking at the door.

This is wholesale greed if I ever saw it.

Many of these lawmakers are pulling in 6 figures, the people who will pay for this are pulling in 5.

And right around the corner, the 2017 Obamacare Employer Mandates, the new tax structure and the changes in Health care insurance costs, oh , and the increase for not having insurance.

Hope there is a special place in hell for all these people who believe they can take from us to fund their opulent lifestyles.

Kingofearth's avatarKingofearth

Quote: Originally posted by dpoly1 on Jul 20, 2016

Puke

Pennsylvania is The State Of Corruption!

You really gonna complain about a 3% tax increase? Taxes are absurdly low, we need real increases. 

Drenick1's avatarDrenick1

Quote: Originally posted by noise-gate on Jul 20, 2016

l just hope that California does not follow suit.

I am fairly certain that California is looking at that possibility especially after the Chino Hills PB winner turned in their ticket. 13.3% is tough to overlook especially with the financial hardship the state is experiencing.

TheGameGrl's avatarTheGameGrl

Quote: Originally posted by Kingofearth on Jul 20, 2016

You really gonna complain about a 3% tax increase? Taxes are absurdly low, we need real increases. 

yes and its completely acceptable to complain and bring to the attention of the public. 

today 3% , next year another 1%. Inch by inch more proceeds will go to the state. 

Do you get a 3% raise each year? Some of us do not. 

pandoras' box has been opened.

Subscribe to this news story