New Jersey Income Tax withholding is based on the total amount of the prize won. 8% for Lottery payouts over $10,000, if the claimant does not provide a valid Taxpayer Identification Number.8% for Lottery payouts over $500,000 and.The withholding rates for gambling winnings paid by the New Jersey Lottery are as follows: If a prize is taxable (i.e., over $10,000), the entire amount of the payout is subject to withholding, not just the amount in excess of $10,000. The rate is determined by the amount of the payout. New Jersey Income Tax is withheld at an amount equal to three percent (3%) of the payout for both New Jersey residents and nonresidents ( N.J.S.A.
