Tax on sweepstakes winnings can significantly impact the amount you ultimately receive. When you win a sweepstakes, the IRS considers it taxable income, meaning you must report the full amount on your tax return. Depending on your total income, you may face a higher tax bracket, resulting in a substantial tax on sweepstakes winnings. It's essential to set aside a portion of your winnings to cover these taxes, ensuring you remain compliant with tax regulations and avoid any surprises come tax season.