Yes , raffle winnings are taxable in the United States. Whether you win cash, a car, electronics, or another prize, the IRS generally considers raffle prizes as taxable income.
Many people assume raffles are different from lotteries or gambling, but from a tax perspective, the IRS treats raffle winnings the same as other prize winnings.
If you win a raffle:
- The prize value must be reported as income
- You may owe federal and state taxes
- The winnings are not tax-free, even for charity raffles
This applies whether the raffle is online, in-person, or hosted by a nonprofit.
Why the IRS Taxes Raffle Winnings
The IRS classifies raffle prizes as “other income” or gambling winnings, depending on the situation.
According to IRS rules:
- Any prize with monetary value is taxable
- Income includes cash, vehicles, trips, gift cards, and merchandise
- The fair market value (FMV) of the prize is what gets taxed
What Types of Raffle Prizes Are Taxed?
All of the following are taxable raffle winnings:
| Prize Type | Taxable? |
| Cash prizes | Yes |
| Cars, motorcycles | Yes |
| Electronics | Yes |
| Vacation packages | Yes |
| Gift cards | Yes |
| Event tickets | Yes |
Even if you don’t sell the prize, you still owe tax on its fair market value.
How Much Tax Do You Pay on Raffle Winnings?
Federal Tax
- Raffle winnings are taxed as ordinary income
- Your tax rate depends on your income bracket
- Large prizes may trigger automatic withholding
Withholding Rule
If winnings exceed $5,000, the payer may withhold 24% federal tax upfront.
Example:
- Win $10,000 → $2,400 may be withheld
- You still report the full $10,000 on your tax return
Federal vs State Taxes on Raffle Winnings
In addition to federal tax:
- Most states also tax raffle winnings
- State rates vary (some states don’t tax income)
- You may owe state income tax even if federal tax was withheld
Always check your state-specific tax rules.
IRS Forms: How Raffle Winnings Are Reported
Form W-2G
- Issued for certain prize amounts
- Shows prize value and taxes withheld
- Sent to both you and the IRS
How You Report It
- Include winnings on Form 1040
- Report under “Other Income” if not listed as gambling
Are Raffle Winnings from Charity Events Taxable?
Yes.
Even if the raffle supports a nonprofit or school:
- Winnings are still taxable
- Charitable purpose does not change IRS rules
However, your raffle ticket purchase may have separate tax rules.
Are Raffle Tickets Tax Deductible?
What Happens If You Don’t Report Raffle Winnings?
Failing to report raffle winnings can lead to:
- IRS penalties
- Interest on unpaid taxes
- Audit risk
The IRS often receives prize data directly from raffle organizers, so unreported winnings are easy to detect.
FAQs About Raffle Winnings & Taxes
Do I pay taxes if I give the prize away?
Yes. Taxes are based on winning, not keeping.
Are online raffle winnings taxable?
Yes. Online raffles follow the same IRS rules.
Can I deduct raffle ticket costs?
Usually no, unless very specific conditions apply.
