Are raffle winnings taxable? IRS rules for nonprofit raffles
Updated July 8, 2026
Yes — raffle prizes are taxable income to the winner. A nonprofit running the raffle may have to report a prize to the IRS on Form W-2G (when the prize, minus the ticket price, is $600 or more and at least 300 times the ticket price) and withhold federal tax (24%) on prizes over $5,000. This is general information, not tax advice.
Are raffle prizes taxable?
Yes. A raffle prize — cash or the fair market value of merchandise — is taxable income to the person who wins it, and they report it on their own tax return. The nonprofit running the raffle has separate reporting and withholding duties depending on the prize size.
When must a nonprofit report a prize (Form W-2G)?
The organization files Form W-2G for a prize when the amount — after subtracting the ticket price — is $600 or more AND at least 300 times the ticket price. For example, a $600 prize on a $1 ticket meets the 300× test, so it's reportable.
When do you withhold federal tax?
If a prize (minus the ticket price) is more than $5,000, the organization must withhold 24% for federal income tax and remit it to the IRS (using Form 945). For a noncash prize where the winner doesn't cover the tax, the value is grossed up (about 33.33%). Backup withholding (24%) also applies to a reportable prize if the winner doesn't provide a taxpayer ID.
A few more notes
- Give the winner a copy of Form W-2G when one is required.
- Keep records of ticket price, prizes, winners, and any tax withheld.
- State tax rules may also apply on top of the federal rules.
This is general information, not tax advice, and the figures can change. Confirm the current rules with a tax professional and see IRS Publication 3079 (Tax-Exempt Organizations and Gaming).
Frequently asked questions
Are raffle winnings taxable?
Yes. A raffle prize is taxable income to the winner, who reports it on their tax return; the nonprofit may also have IRS reporting and withholding duties.
Does a nonprofit report raffle prizes to the IRS?
Yes, on Form W-2G, when a prize (after subtracting the ticket price) is $600 or more and at least 300 times the ticket price.
Do you withhold tax on a raffle prize?
On a prize over $5,000 (net of the ticket price), the organization withholds 24% for federal tax and remits it on Form 945. Noncash prizes are grossed up (about 33.33%).
Keep reading
- Do you need a license to run a football squares fundraiser?Whether you need a license or permit to run a football squares raffle depends on your state — some require registration, some let small raffles run license-free, and a few ban paid raffles. Here's how to find out.
- Are football squares legal?Whether a football squares pool is legal depends on how it's run. Here's how football squares work as a charitable raffle — a nonprofit, in-person sales, and no house cut — and why the rules vary by state.
- Raffle rules by state →The registration, sales, and proceeds rules for all 50 states, with the official source for each.
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