The Harsh Truth: New Jersey Is One of the Worst States to Win the Lottery
Uncle Sam and New Jersey grin while an angry lottery winner holds a billion-dollar check.
A Billion-Dollar Dream with a Jersey Twist
The Powerball jackpot has hit eye-watering levels—just imagine pocketing over a billion. If you’re playing from New Jersey, though, that dream comes with a hefty price tag: the Garden State takes a massive bite out of your winnings.
Lump Sum vs. Annuity: Classic Dilemma
Every jackpot winner faces two payout options:
Lump Sum (Cash Option)
A $1.4 billion jackpot may translate into about $675 million before taxes.
After federal (37%) and New Jersey state tax (up to 10.75%), the actual take-home sits around $350–400 million.
But: If managed wisely, that money can grow—and fast.
Annuity
Spreads payments over 30 years, increasing by about 5% each year.
Total equals the full jackpot, but you lose out on immediate investment power. Still, it's self-discipline built in.
Bottom line: If you have the discipline and advisors lined up, the lump sum is almost always the better financial move—unless you’d burn through the money too fast.
New Jersey: One of the Worst States to Win
Why is winning in New Jersey such a raw deal?
State income tax on lottery winnings: up to 10.75%
Combined with federal tax, you’ll lose nearly half your prize before you’ve even had time to say “Taylor ham, egg and cheese.”
New Jersey shares the “worst state” list with:
New York – worst overall at 10.9%
Maryland – ~ 8.75%
Washington, D.C. – ~ 8.5%
Oregon – ~ 8%
With those rates, your state takes the bigger slice of the jackpot than you do.
The Best States to Win
Want to keep your entire prize? Some states don’t tax lottery winnings at all:
Florida
Texas
Tennessee
Wyoming
South Dakota
Bonus: California doesn’t tax lottery winnings either—even though its income tax rate is otherwise high.
The Lottery Curse: When Winning Means Losing
Sudden wealth isn’t always a blessing. The stats are grim:
Up to 70% of lottery winners go broke within just a few years. That’s the widely cited figure from the National Endowment for Financial Education, though they’ve since clarified the data is anecdotal—but the trend holds.
A more conservative estimate: about 30% of winners declare bankruptcy within 3–5 years
Why so many fail?
Overspending on luxury and lifestyle upgrades
Scam artists, predatory requests from friends/family
Poor financial planning and risky investments
When New Jersey Winners Hit the Skids
Yes, New Jersey has its own horror stories:
Evelyn Adams won the New Jersey Lottery twice—$3.9 million in October 1985 and $1.4 million in February 1986, both paid as annuities. But by 2012, she had blown through her winnings via compulsive gambling in Atlantic City and bad business deals—and was reportedly living in a trailer (Wikipedia).
That’s a real Jersey cautionary tale: she won multiple times but ended up broke.
Can You Stay Anonymous in New Jersey?
One silver lining: you don’t have to go public with your win anymore. Since 2020, a law signed by Governor Phil Murphy allows winners to remain anonymous—something earlier generations of Jersey winners could only dream of.
So at least your name stays off the tabloids—though your tax bill sure doesn’t.
Final Word: Jersey Winners—Tread Carefully
Winning the lottery in New Jersey? Don’t get too excited. Taxes will take their pound of flesh, and without discipline, that windfall can vanish fast—just ask Evelyn Adams. Your best play:
Take the lump sum
Hire legal, financial, and tax advisors immediately
Consider relocating to one of the no-state-tax winners to keep more of your cash
Question for Readers: If you hit the Powerball in New Jersey, would you stay put and shoulder the state tax—or flee to Florida before claiming your prize?
