North Carolina launches new "Taxes Paid" scratch-offs
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The North Carolina Education Lottery has launched four scratch-offs that advertises "Taxes Paid" in the name. According to the lottery's game listings, the four went on sale September 1 at $2, $5, $10, and $20, with headline prizes of $20,000, $200,000, $1 million, and $2 million respectively.
The lottery prints a bigger prize than the one on the front of the ticket to account for taxes. The $1,000,000 Taxes Paid game carries an actual top prize of $1,388,696.
The gross-up factor is 38.87%
| Game | Price | Advertised | Actual prize printed |
|---|---|---|---|
| $20,000 Taxes Paid | $2 | $20,000 | $27,774 |
| $200,000 Taxes Paid | $5 | $200,000 | $277,740 |
| $1,000,000 Taxes Paid | $10 | $1,000,000 | $1,388,696 |
| $2,000,000 Taxes Paid | $20 | $2,000,000 | $2,777,392 |
All four multiply the advertised figure by 1.3887. That factor is what you need to gross up a prize so that 27.99% withholding leaves the same amount as the advertised prize, and 27.99% is exactly the flat 24% federal rate withholdings on gambling prizes plus North Carolina's 3.99% state income tax.
The problem is that withholding doesn't account the full federal taxes
Federal withholding on lottery prizes is a flat 24% no matter the size of the prize or the income of the winner. Actual federal tax is progressive, and a prize above $626,350 reaches the 37% bracket. Gross up for the withholding and it ends up being less than the advertised amount.
| Advertised | Prize printed | Real federal tax | NC 3.99% | What you keep | Vs advertised |
|---|---|---|---|---|---|
| $20,000 | $27,774 | $3,094 | $1,108 | $23,571 | +$3,571 |
| $200,000 | $277,740 | $66,756 | $11,082 | $199,902 | about level |
| $1,000,000 | $1,388,696 | $470,838 | $55,409 | $862,449 | -$137,551 |
| $2,000,000 | $2,777,392 | $984,655 | $110,818 | $1,681,919 | -$318,081 |
The $5 game comes within $98 of its $200,000, because a prize that size is lower federal taxes.
The $2 game goes the other way and pays about $3,571 more than advertised. At $27,774 of income the real federal tax is roughly 11%, so the flat 24% withholding takes far too much and the difference comes back as a refund.
The $1 million ticket leaves about $862,449 once the return is filed, and the $2 million ticket about $1,681,919.
Our lottery tax calculator runs the real figures for any prize in any state, and how lottery winnings are taxed explains why withholding and liability are different numbers.
How the tickets rate on their own terms
The $20 rates 77.5 on our ValueScore™, seventh of North Carolina's 89 active games, and the $2 rates 49.5 at 45th.
| Game | Price | Payout | NC average | Odds | ValueScore™ | NC rank |
|---|---|---|---|---|---|---|
| $2,000,000 Taxes Paid | $20 | 74.7% | 76.3% | 1 in 3.78 | 77.5 | 7th |
| $1,000,000 Taxes Paid | $10 | 72.3% | 74.6% | 1 in 3.95 | 70.9 | 10th |
| $200,000 Taxes Paid | $5 | 69.0% | 69.0% | 1 in 4.30 | 58.2 | 29th |
| $20,000 Taxes Paid | $2 | 66.3% | 66.3% | 1 in 4.51 | 49.5 | 45th |
Three of the four pay at or below the North Carolina average for their price, and the $20 gives back 1.6 points less than a typical North Carolina $20 ticket. The state's strongest game remains the $50 500X The Cash at 90.7.
Taxes-paid games are rare. Across all the active games we score, only six carry this structure, four of them these new North Carolina tickets, with one each in Georgia and Missouri.
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Frequently Asked Questions
How do Taxes Paid scratch-offs work?
The lottery prints a larger prize than the one it advertises, sized so that what lands in your hand after withholding equals the advertised figure. North Carolina grosses each prize up by 38.87%, so the $1,000,000 Taxes Paid game actually carries a $1,388,696 prize. Withholding of 27.99% comes off that and leaves exactly $1,000,000.
Do you really keep $1 million on the $1,000,000 Taxes Paid game?
At the claim counter, yes. On your tax return, no. Withholding is a flat 24% federal rate, not a calculation of what you owe, and a $1,388,696 prize reaches the 37% federal bracket. If the prize is your only income for the year, the real federal tax is about $470,838 and you keep roughly $862,449.
Which Taxes Paid game comes closest to its advertised figure?
The $5 game. Its $277,740 prize leaves about $199,902 after real federal and state tax, within $98 of the advertised $200,000. The $2 game overshoots and pays about $3,571 more than advertised, because 24% withholding takes more than a winner at that income level actually owes.
Jessie Jurado is a news writer who covers new scratch-off launches, state lottery guides, taxes on winnings, news, and much more. She joined ScratchCheck in 2026 and writes the site's state-by-state coverage.
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