US Lottery Tax for Foreign Winners: the 30% Withholding and the Treaty List (2026)

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If you live outside the United States and a US lottery ticket bought for you wins, the first tax question is American. The rule is in IRS Publication 515, quoted below from its 2026 edition. This guide sets out what that text says, where it stops, and how it meets the way a lottery courier pays prizes. It is general information, not tax advice.

The rule: 30% of the gross amount

IRS Publication 515 (2026) states the default in one sentence: "In general, nonresident aliens are subject to chapter 3 withholding at 30% on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty." The same paragraph says "The tax withheld and winnings are reportable on Forms 1042 and 1042-S."

Three details matter for a lottery prize:

• The 30% applies to gross proceeds, meaning the amount before any deductions.
• Publication 515 exempts five casino games, and a lottery draw is not one of them: "No tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States."
• No dollar threshold is stated. The rule covers "the gross proceeds from gambling" without a minimum amount.

The often-quoted $5,000 figure belongs to a different rule. The Instructions for Forms W-2G and 5754 (01/2026) say "Withhold at the 24% rate if the winnings minus the wager are more than $5,000", with lotteries on the list, but also that "Payments of gambling winnings to a nonresident alien individual or a foreign entity aren’t subject to reporting or withholding on Form W-2G"; those go to the 30% rule and Form 1042-S.

State tax is a separate layer: Powerball's FAQ says "Federal and jurisdictional income taxes may apply to any claimed prize money".

The treaty list, verbatim

Publication 515 (2026) names the countries whose residents are not taxed by the United States on gambling income. In full: "Gambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom."

Two more lines complete it:

• Malta is a reduced rate, not an exemption: "Gambling income of residents of Malta is taxed at 10%."
• Hungary and Russia have dropped off. Their treaty provisions on gambling winnings "are no longer in operation", and 30% withholding applies from 1 January 2024 for Hungary and from 16 August 2024 for Russia.

If your country is not named, the text leaves you with the 30% default; Australia, Canada, India, Kenya, Mexico, Nigeria, Panama and the Philippines, for example, are not on the list. Note "as defined by treaty": who counts as a resident is set by the treaty itself. The Form 1042-S instructions point to this same Publication 515 list.

A treaty claim needs a form from you

The exemption is not applied by itself. Publication 515 is written for withholding agents, the people who pay the income, and tells them: "Claimants must give you a Form W-8BEN (with a U.S. or foreign TIN) to claim treaty benefits on gambling income that is not effectively connected with a U.S. trade or business." In other words, the winner gives a completed W-8BEN, with a US or foreign taxpayer identification number, to whoever pays the prize.

What the IRS text does not say

Two gaps are worth stating plainly.

First, the IRS documents quoted here do not say whether a lottery prize counts as treaty "gambling income". The word "lottery" does not appear in Publication 515 (2026), Publication 519 (2025), Publication 901 or the instructions for Forms 1042-S and W-8BEN. The closest thing to a definition is income code 28 in the 1042-S instructions: "Use code 28 for gambling winnings. These are proceeds from a game other than blackjack, baccarat, craps, roulette, or big-6 wheel." That tells a payer how to report; it does not settle what a treaty covers.

Second, Publication 515 states no threshold for nonresident aliens. If you are a resident of a listed country and a meaningful prize is at stake, ask a tax adviser how your treaty applies before the prize is paid.

How this meets the courier model

A lottery courier changes who collects a prize. theLotter's terms split prizes in two. For "lower-tier prizes that do not require in person collection, we will collect the winnings from the authorised retailer or lottery operator and credit the corresponding amount to your Account once received" (§8.1.2). On tax, §8.1.3(c) says "tax treatment depends on the jurisdiction of the underlying lottery and any required withholding will be applied before crediting your Account".

A jackpot works differently. theLotter's homepage says "For large wins, prizes must be claimed in person in accordance with the lottery operator’s rules", and Powerball's FAQ says "Prizes must be claimed in the jurisdiction where the winning ticket was purchased." theLotter's How It Works page says a jackpot winner is told "how to collect your win from the official lottery’s office". So a courier collecting a small prize for you and a winner claiming a jackpot in person are two different payment situations. If you are relying on a treaty, ask the courier before ordering how a treaty claim would work for prizes it collects. The steps after a win are in what happens when you win through a lottery courier.

For scale, and as arithmetic only: powerball.com advertised the Powerball jackpot at $440 million, with a cash value of $183.1 million, as of 2 October 2026; 30% of that cash value is $54.93 million. The latest draws and prize tiers are on theLotter's US Powerball results page.

A European contrast: Spain withholds too

Spain's tax agency (Agencia Tributaria) applies a special levy to prizes from games run by SELAE, the state lottery company, whose products include Euromillones according to a July 2025 notice in Spain's official gazette (BOE). Prizes up to €40,000 are exempt; above that, only the excess is taxed, at a withholding rate of 20%. The agency's own example: on a €100,000 prize, €12,000 is withheld and €88,000 paid.

Spain also shows that a treaty does not always stop withholding at source. Its non-resident tax manual says withholding applies to these prizes even when a double-tax treaty exempts them ("aunque estén exentos en virtud de lo dispuesto en un convenio para evitar la doble imposición"); tax withheld beyond the treaty amount can then be reclaimed on form 210 (modelo 210). The tax comparison continues in EuroMillions vs Powerball.

Home-country tax: two examples, for information only

Your own country may also tax the prize, or may not. Two examples show how far apart the answers can be; neither is an invitation to take part.

• United Kingdom: gov.uk lists "premium bond or National Lottery wins" (the UK's own lottery) among the things you do not pay Income Tax on, and its Capital Gains Tax page excludes gains from "betting, lottery or pools winnings". The UK is on the Publication 515 treaty list, but the open question about lottery prizes applies to it too.
• South Africa: SARS excludes from Capital Gains Tax prizes from gambling "authorised by, and conducted under, the laws of South Africa, for example, the National Lottery". Its comprehensive CGT guide, which reflects the law as at 15 January 2020, says such gains are subject to CGT if they "arise in respect of foreign gambling, games and competitions", and its worked example treats "United Kingdom Lotto winnings" as subject to CGT. Separately from tax, a South African government publication lists "Lotteries conducted outside the Republic that may also be accessed via internet" as prohibited under section 59 of the Lotteries Act.

Before you rely on any of this

• Check your country against the Publication 515 list, word for word.
• If it is listed, ask how a Form W-8BEN would reach the payer before any prize is paid.
• Expect the selling state's tax rules on top of the federal rule, and your own country's rules after both.
• For a jackpot, get tax advice in your country of residence before you travel to claim.

Results for the draws theLotter lists are on theLotter's results pages.

Sources: IRS Publication 515 (2026), Publication 519 (2025), Instructions for Form 1042-S (2026) and Forms W-2G and 5754 (01/2026); powerball.com (FAQ; jackpot as of 2 October 2026); theLotter homepage, How It Works and Terms of Use v2.12; Agencia Tributaria; BOE; gov.uk; SARS; Vuk'uzenzele. Not tax advice.

Frequently asked questions

How much US tax is withheld from a lottery prize won by a non-resident?

IRS Publication 515 (2026) says nonresident aliens are subject to 30% withholding on the gross proceeds from gambling won in the United States, unless the income is effectively connected with a US trade or business or is exempted by treaty. Powerball's FAQ adds that federal and jurisdictional income taxes may apply to prize money.

Which countries are on the IRS treaty list for gambling income?

Publication 515 (2026) lists Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine and the United Kingdom (Malta: 10%; Hungary and Russia removed). It does not say whether a lottery prize counts as treaty gambling income, and benefits are claimed with a Form W-8BEN given to the payer, so ask a tax adviser.

Is a treaty exemption applied automatically?

No. Publication 515 says claimants must give the payer a Form W-8BEN, with a US or foreign taxpayer identification number, to claim treaty benefits on gambling income. The IRS text also does not say whether a lottery prize counts as treaty gambling income, so check with a tax adviser.

Is there a minimum prize below which the 30% rule does not apply?

Publication 515 states no threshold for nonresident aliens. The $5,000 figure often quoted comes from the 24% rule in the Form W-2G instructions, which also say that payments of gambling winnings to nonresident aliens are not subject to reporting or withholding on Form W-2G.

How is tax handled when a courier collects a prize for you?

theLotter's terms say tax treatment depends on the jurisdiction of the underlying lottery and that any required withholding is applied before a prize is credited to your account. A jackpot is claimed in person in the jurisdiction where the ticket was bought, which is a different payment situation.