Pennsylvania hikes lottery tax by 3.07%

TAGs: Leonard Postrado, Lottery, Pennsylvania

To help balance its financial sheets, the State of Pennsylvania will dig deeper into the pockets of lottery winners.

Pennsylvania hikes lottery tax by 3.07%The Times-Tribune reported that the State of Pennsylvania will be imposing a 3.07 percent state personal income tax on lottery winnings over $5,000 before the winners collect their prizes under the new state budget for fiscal 2016-17.

This is the first time that winning lottery players are required to pay the state income tax since the game made its debut in 1972. Other lottery prizes, such as gift cards and merchandise, are exempt from the tax.

According to the report, the imposition of new state tax revenue is the viable solution that the government has come up to address Pennsylvania’s chronic fiscal problems. The lottery tax, which covers lottery winnings since Jan 1, is expected to generate nearly $16 million in revenue this fiscal year.

“The commonwealth has a huge financial hole, and this (lottery winnings tax) was part of a much-needed larger revenue package,” Jeff Sheridan, spokesman for Gov. Tom Wolf, said as quoted by the news website.

On July 13, the state of Pennsylvania has approved the $31.5 billion state budget. Aside from lottery, the state will get its funding from taxes collected from expanded commercial wine sales, new taxes on tobacco users and consumer downloads of videos, music and apps, a tax amnesty, a big loan and fund transfer.

The state will notify the 46,000 lottery winners, who won cash prizes of more than $600 during the first half of this year, through mail. Under the law, winners who cashed in $600 and above is required to report their winnings to the Revenue Department and IRS.

“The letters are being sent as a courtesy so that winners can be sure to correctly report their winnings and keep current with any tax obligations,” department spokesman Kevin Hensil told the news website.


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