When does the Iowa Lottery deduct state and federal tax from a players prize?
The Iowa Lottery does not withhold taxes for prizes of $600 or less. By law, prizes of more than $600 and less than $5,000 will face a 5 percent state withholding tax. If a player wins more than $5,000, a 5 percent state withholding tax and a 25 percent federal withholding tax will be taken out when the prize is claimed. It’s important to remember that this is a withholding. The winners may get some of it back, or may have to pay more, depending on their income.
