Oklahoma Gambling Tax Rate
The legislation adopted in special session, House Bill 1010xx, also increased gross production tax rates. Oklahoma's previous rate on oil and gas production allowed new wells to operate at a 2-percent rate for the first three years of production. Now, those wells and new ones beginning production will be taxed at 5 percent. Withholding on Gambling Winnings Gambling winnings are subject to withholding for federal income tax at a rate of 24% as of 2020 if you win more than $5,000 from sweepstakes, wagering pools, lotteries, or other wagering transactions, or anytime the winnings are at least 300 times the amount wagered.
Lottery players beware: Federal and state income taxes could eat as much as 42 percent of your winnings.
Even worse, if you win a large prize and die before seeing the cash, your heirs' tax bill could exceed 90 percent.
That message came Wednesday during a Webcast seminar for Oklahoma lawyers on how to represent lottery winners and retailers.
Presenter Susan Shields, an Oklahoma City attorney, said the federal and state income tax rates on lottery winnings can hit 35 percent and 7 percent, respectively, depending on the prize amount, for a total tax bite of 42 percent.
Under federal law, the Oklahoma Lottery Commission must withhold 25 percent of winnings on prizes exceeding $5,000, Shields said.
These provisions most likely will affect winners of the multistate Powerball game and large Oklahoma based online games.
The most recent Powerball winner, for instance, was an Air Force sergeant from New Mexico who won $93.4 million.
Such winners have a choice: the entire prize paid as an annuity over many years, or a much lower lump sum in this case, $52.2 million.
Shields said many winners choose the lump sum for tax reasons.
For instance, if a Powerball winner dies, his heirs would be subject to a 47 percent estate tax, plus 42 percent in combined income taxes, plus interest, she said.
'That is a pretty bad result for the winner ... but also for his family, who won't inherit very much, Shields said.
Oklahoma Gambling Tax Rate Tax
The annuity option in such a case leaves the heirs even less, she said.
Here's the good news, Shields added almost half jokingly: The cost of the winning ticket is tax-deductible.
Unlike Texas and some other states, Oklahoma doesn't allow a winner to sell his lottery annuity to a brokerage house or even to assign it to a relative without a judge's order, she said.
However, Oklahoma's lottery law allows the commission to garnish prize money from winners who owe debts and to deduct delinquent child support payments.
'This may be a reason someone might not want much publicity about winning, Shields said.
Oklahoma Gambling Tax Rate 2020
She said Oklahoma lottery winners who subsequently divorce would have to split the money.
Presenter Armand Paliotta said the application process for retailers hoping to sell lottery tickets is 'fairly burdensome.
They must disclose all owners, officers and operators and notify the Lottery Commission of ownership changes.
Retailers also must be current in state tax filings and payments and cannot have a felony conviction.
Oklahoma State Tax Rate On Gambling Winnings
Paliotta advised lawyers to have clients sign the back of any large winning ticket.
'That would prevent someone else who finds it from cashing it, he said.
Oklahoma Gambling Tax Rate 2019
Although lawyers will want to help their clients remain anonymous for various reasons, that will be easier said than done, Paliotta said.
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