Taxes on Lottery Winnings
Lotteries are a popular way for people to raise money for public purposes. In the 15th century, lotteries were common in the Low Countries. Cities held lotteries to fund public projects like fortifications, aid for the poor, and other social services. They became popular and were hailed as an efficient and painless taxation method. In the 15th century, Francis I of France authorized the first European lotteries. The first European public lottery, called a ventura, was held in the Italian city-state of Modena. The Italian city-state of Genoa also allowed lotteries in its city-state.
Lotteries have a long history in the United States. George Washington conducted a lottery in the 1760s to help finance his expedition to the new world. Benjamin Franklin supported lotteries during the American Revolution. In Boston, John Hancock used a lottery to raise funds to rebuild Faneuil Hall. But as time passed, lotteries became controversial and ultimately stopped. In 1832, the Boston Mercantile Journal reported that there were 420 lotteries in eight states.
Some countries don’t tax lottery winnings. France, Canada, Ireland, Italy, New Zealand, and the Netherlands do not require winners to pay personal income tax on the amount they win. Finland and the United Kingdom do not tax lottery prizes at all. In addition, Liechtenstein pays winners a lump sum and annuity, which are tax-free. However, these rules may not apply to winnings in other jurisdictions.