No sales tax on Mississippi lottery tickets, but winnings will still be taxed

Feb 28, 2019, 11:34 am (13 comments)

Mississippi Lottery

The Mississippi Legislature is expected to pass a measure clarifying that tickets for state's soon to be rolling lottery are exempt from sales taxes.

But the state tax man will still get his cut on lottery winnings in Mississippi: They will be taxed as income, at the same scaled rate of 3 percent to 5 percent as any other income.

This is a blow to Jackson, where Mayor Chokwe Antar Lumumba had been counting on lottery ticket revenue from a 1-cent sales tax in the city tacked on to the 7-cent state sales tax. Lumumba late last year had estimated the city would receive about $4 million a year from it's share of state sales taxes plus the 1-cent sales tax on tickets beyond money the city expects to receive from state lottery proceeds earmarked for local infrastructure by the Legislature.

House Bill 1576, pending in the Legislature and expected to pass, makes clear lottery tickets are exempt from sales taxes in Mississippi — as they are in all other states in the U.S. that have a lottery.

But state Revenue Commissioner Herb Frierson said lottery tickets wouldn't be subject to sales taxes under current laws and regulations.

"I don't think you need a bill," Frierson said. "It's considered a service, not tangible personal property. It's evidence of a bet is all it is. Why would you tax evidence of a bet?"

Frierson said a lottery ticket is itself a form of tax — "a tax on stupidity." [Editor: I guess Herb is not on board with a lottery yet.]

City of Jackson lobbyist Quincy Mukoro said he still hopes for a change in the bill to funnel additional money to Jackson.

"Our understanding when we passed the bill last year was that the sales tax component of the bill was critical to get the bill passed," Mukoro said.

While no states charge sales taxes on lottery tickets, there are a wide variety of tax rates on winnings. Ten states, including neighbor Tennessee, charge no state tax on lottery winnings. New York has the highest rate at nearly 9 percent. 

Lottery winnings are subject to a 25 percent federal tax withholding.

After decades of debate, lawmakers in a summer special session last year approved a state lottery, which is expected to be up and running in 2019, as early as this summer. It's expected to net the state about $40 million the first year, then $80 million to $100 million a year thereafter.

For the next decade, up to $80 million a year from lottery proceeds will go toward working on state roads and bridges or to match federal infrastructure money. Any revenue above $80 million would go to public education, the Education Enhancement Fund.

Clarion Ledger

Comments

music*'s avatarmusic*

Like the Beatles song, The Taxman. Uncle Sam is everywhere. Why can't the States give us players a break. I get a break here in California. The highest tax rate here is 13%. I do not have to pay that. It feels good.

 Thank You Voters, Legislature, and Governor for not taxing any lottery winnings.

 I noticed that the Icons are down. Is Todd improving them or is it my computer?

Bleudog101

Glad somebody has some common sense there.  Never paid a 'sales tax' on a lottery anywhere I've played and that's a lot of states.  Imagine paying 7% of a $3 ticket?  Ridiculous.

Coin Toss's avatarCoin Toss

From the OP;

This is a blow to Jackson, where Mayor Chokwe Antar Lumumba had been counting on lottery ticket revenue from a 1-cent sales tax in the city tacked on to the 7-cent state sales tax.

Anyone this ignorant about lotteries shouldn't ba allowed to have anything to do with them.

Yo there, Mr. Mayor........If your state gets a lottery they will get lotto machines, have you ever seen a lotto machine that takes paper currency and coins?

Bang Head

Despite Mississippi's efforts to get their residents to play in Mississippi the mayor of Jackson had found a very unique way to encourage people from Mississippi to continue to play other state's lotteries.

Big Joey

Quote: Originally posted by Coin Toss on Feb 28, 2019

From the OP;

This is a blow to Jackson, where Mayor Chokwe Antar Lumumba had been counting on lottery ticket revenue from a 1-cent sales tax in the city tacked on to the 7-cent state sales tax.

Anyone this ignorant about lotteries shouldn't ba allowed to have anything to do with them.

Yo there, Mr. Mayor........If your state gets a lottery they will get lotto machines, have you ever seen a lotto machine that takes paper currency and coins?

Bang Head

Despite Mississippi's efforts to get their residents to play in Mississippi the mayor of Jackson had found a very unique way to encourage people from Mississippi to continue to play other state's lotteries.

 A lottery ticket is not merchandise, and cannot be taxed.

DELotteryPlyr

Quote: Originally posted by Coin Toss on Feb 28, 2019

From the OP;

This is a blow to Jackson, where Mayor Chokwe Antar Lumumba had been counting on lottery ticket revenue from a 1-cent sales tax in the city tacked on to the 7-cent state sales tax.

Anyone this ignorant about lotteries shouldn't ba allowed to have anything to do with them.

Yo there, Mr. Mayor........If your state gets a lottery they will get lotto machines, have you ever seen a lotto machine that takes paper currency and coins?

Bang Head

Despite Mississippi's efforts to get their residents to play in Mississippi the mayor of Jackson had found a very unique way to encourage people from Mississippi to continue to play other state's lotteries.

I bet he was thinking this - player buys a $1 ticket, has to put $2 in, gets a voucher from machine for .99cents that they have to take to the cashier to get the change....Green laugh

STUPID politicians Bash

noise-gate

Miss legislature's are not idiots. They not setting up a lottery without some reward coming to the State. Sure their citizens have been crossing State lines to play the lottery, and they hope to stem that tide. But thinking that only the convenient stores & the lottery itself would reap the benefits is being shortsighted to say the least. The question is, do neighboring States have State taxes on lottery winnings or not, if not, the border crossing may continue. 

Big Joey

Quote: Originally posted by noise-gate on Feb 28, 2019

Miss legislature's are not idiots. They not setting up a lottery without some reward coming to the State. Sure their citizens have been crossing State lines to play the lottery, and they hope to stem that tide. But thinking that only the convenient stores & the lottery itself would reap the benefits is being shortsighted to say the least. The question is, do neighboring States have State taxes on lottery winnings or not, if not, the border crossing may continue. 

Louisiana, & Texas lottery claim winners have to pay taxes over anything over $1,200.00

I got $840.00 from a $1,200.00 win once. And, I won $1,000.00 once and didn't have to pay taxes.

Tucker Black's avatarTucker Black

What kind of idiot thinks that lottery tickets would be subject to sales tax? ROFL

sully16's avatarsully16

Catch up to the rest of us Mississippi.

Technut's avatarTechnut

Quote: Originally posted by Big Joey on Feb 28, 2019

Louisiana, & Texas lottery claim winners have to pay taxes over anything over $1,200.00

I got $840.00 from a $1,200.00 win once. And, I won $1,000.00 once and didn't have to pay taxes.

Big Joey, In Texas the only taxes collected on lottery winnings is federal. Texas has no state income tax.

Big Joey

Quote: Originally posted by Technut on Mar 3, 2019

Big Joey, In Texas the only taxes collected on lottery winnings is federal. Texas has no state income tax.

Yes, that's paying taxes on wins starting at $1,200.00 But, not a double whammy of federal, & state.

Stack47

Quote: Originally posted by noise-gate on Feb 28, 2019

Miss legislature's are not idiots. They not setting up a lottery without some reward coming to the State. Sure their citizens have been crossing State lines to play the lottery, and they hope to stem that tide. But thinking that only the convenient stores & the lottery itself would reap the benefits is being shortsighted to say the least. The question is, do neighboring States have State taxes on lottery winnings or not, if not, the border crossing may continue. 

There is a problem with crossing the Mississippi border to play lottery games because the western border is the Mississippi River and it borders Alabama in the east. The people living in the northern part of the state can play in Tennessee or cross the bridge into West Memphis and those in the south can play in Louisiana and Florida. 

It's pretty amazing how much money lotteries can generate so it's not unheard of that some municipalities and small time politicians to try to get a piece of the pie. I bought lottery tickets in several states but never paid sales tax in any of they. If a clerk added "city sales tax" to my lottery purchase, I'd tell them to keep it.

It doesn't look like the Mississippi Lottery is off to a good start. Wait until they find out how little of the money they will generate they actually keep,

Stack47

Quote: Originally posted by Big Joey on Feb 28, 2019

Louisiana, & Texas lottery claim winners have to pay taxes over anything over $1,200.00

I got $840.00 from a $1,200.00 win once. And, I won $1,000.00 once and didn't have to pay taxes.

Federal Taxes are on lottery winnings over $600 in every state. Winners are issued a W-2G, taxes are not deducted, and state taxes if any are from the individual state tax form.

End of comments
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