Are Sweepstakes Winnings Taxable? Yes, in the United States, any winnings from sweepstakes, contests, or lotteries are considered taxable income by the IRS. This means that winners must report their earnings on their tax returns, and the amount is subject to federal income tax. Additionally, some states may impose their own taxes on these winnings. Are Sweepstakes Winnings Taxable? It's essential for winners to keep accurate records and consult a tax professional to ensure compliance with tax regulations and to understand their potential tax liabilities.