What is the tax on sweepstakes winnings? In the United States, sweepstakes winnings are considered taxable income by the IRS. This means that winners must report their earnings on their tax returns, and the amount taxed can vary based on the total winnings and the individual's tax bracket. What is the tax on sweepstakes winnings can also depend on whether the prize is cash or non-cash, as non-cash prizes may require a fair market value assessment. It's essential for winners to keep accurate records and consult a tax professional to ensure compliance.