Lotto tax in the Philippines: the 20% final tax on PCSO winnings above ₱10,000

Lotto prizes of ₱10,000 or less are tax-free. Above ₱10,000, PCSO withholds a 20% final tax before it pays you. That rule dates from the TRAIN law, which took effect on 1 January 2018; before then, PCSO and lotto winnings were exempt from income tax. Lotto is run by the Philippine Charity Sweepstakes Office (PCSO), separately from PAGCOR's casinos and online gaming, where players must be 21+.

The text of the law

Section 24(B)(1) of the National Internal Revenue Code, as amended by Section 5 of Republic Act No. 10963 (TRAIN), reads in the relevant part:

"A final tax at the rate of twenty percent (20%) is hereby imposed upon … prizes (except prizes amounting to Ten thousand pesos (₱10,000) or less which shall be subject to tax under Subsection (A) of Section 24; and other winnings (except winnings amounting to Ten thousand pesos (₱10,000) or less from Philippine Charity Sweepstakes and Lotto which shall be exempt), derived from sources within the Philippines"

Three things follow from the wording:

• ₱10,000 or less from PCSO or Lotto is "exempt". Not taxed at a lower rate; not taxed at all.
• Above ₱10,000, the rate is 20%, and it is a final tax. Section 24(A)(1)(a) taxes your regular income "other than income subject to tax under Subsections (B), (C), and (D)", so a lotto prize taxed under 24(B)(1) is not added again to your annual taxable income.
• It covers PCSO games, not only lotto. The exemption names "Philippine Charity Sweepstakes and Lotto"; the 20% applies to other PCSO winnings above ₱10,000 as well.

Section 24 covers individual citizens and resident aliens. Non-resident aliens fall under Section 25, which the TRAIN law did not rewrite for winnings; a foreign winner should ask the BIR.

What was tax-free before 2018

Before TRAIN, two laws kept PCSO prizes out of income tax:

• The Tax Code as enacted in 1997 (RA 8424) put the 20% final tax on "other winnings (except Philippine Charity Sweepstakes and Lotto winnings)". There was no peso limit.
• PCSO's own charter, Section 4 of RA 1169 (1954), said prizes paid from the sweepstakes prize fund "shall be exempt from income tax".

TRAIN changed both. It added the ₱10,000 limit to Section 24(B)(1), and Section 86(c) rewrote Section 4 of RA 1169 without the income-tax exemption for prizes. The law was approved on 19 December 2017 and, under its Section 87, took effect on 1 January 2018.

PCSO applied it immediately. The Philippine Star reported on 20 February 2018 that PCSO was deducting a 20% tax from prizes "starting from P10,000" since January, and that it would ask BIR experts to help explain the change to the public. The first big case it cited was an Ultra Lotto 6/58 jackpot of ₱331,971,464 shared by two bettors.

Worked examples (our arithmetic)

Prize	Tax-exempt?	20% final tax	Winner receives
₱100	Yes	₱0	₱100
₱10,000	Yes	₱0	₱10,000
₱10,001	No	₱2,000.20	₱8,000.80
₱50,000	No	₱10,000	₱40,000
₱1,000,000	No	₱200,000	₱800,000
₱500,614,204.72	No	₱100,122,840.94	₱400,491,363.78

The last row uses the Ultra Lotto 6/58 jackpot GMA News listed for the 8 November 2026 draw.

The ₱10,000 line. The statute exempts winnings "amounting to" ₱10,000 or less and taxes the rest at 20%; it does not say the tax applies only to the part above ₱10,000. On that reading, a ₱10,001 prize leaves the winner with ₱8,000.80, less than a ₱10,000 prize would. That is our reading of the text; ask the BIR if your prize is near the line.

Shared jackpots. The 2018 Ultra Lotto jackpot of ₱331,971,464 split two ways is ₱165,985,732 each; 20% of that is ₱33,197,146.40 per winner, or ₱66,394,292.80 for both.

Shared smaller prizes. Since February 2026, 4- and 5-number prizes in the 6-number games are split among winners, so whether a share is above ₱10,000 depends on how many people matched. On 27 June 2026, The Summit Express listed a Grand Lotto 6/55 4-number share of ₱7,222.22 (exempt) and a single 5-number winner at ₱1,400,000, which is taxed ₱280,000. See odds and prizes.

Digit games. A ₱500 straight 2D bet that hits pays 50 × ₱4,000 = ₱200,000, so ₱40,000 is withheld and the winner receives ₱160,000 (2D Lotto).

The tax already inside every ticket

Prizes are not the only tax. Section 190 of the Tax Code, as amended by Section 63 of the TRAIN law, imposes a documentary stamp tax "on each jai-alai, horse race ticket, lotto, or other authorized numbers games" of ₱0.20, plus ₱0.20 "on every One peso (₱1.00), or fractional part thereof" when the ticket costs more than ₱1.

Since 1 February 2026 a lotto play costs ₱25 (GMA News, 30 January 2026). The Summit Express reported that "Each ticket now costs Php 25, including the Documentary Stamp Tax (DST)." Section 190 charges ₱0.20 on the first peso and ₱0.20 on every additional peso "or fractional part thereof"; on a ₱25 ticket that comes to about ₱5.00 if the additional ₱0.20 is counted on the 24 pesos above the first, or ₱5.20 if it is counted on all 25 (our arithmetic; the text can be read either way).

How the tax is paid

You do not file or pay it yourself. PCSO deducts the 20% at payout; news reports of jackpot claims, such as the Philippine Star's on 21 February 2025 and 20 July 2026, say prizes above ₱10,000 "are subject to a 20-percent tax" under the TRAIN law. To collect a prize, see how to claim a PCSO lotto prize.

A message saying you must send money first to "pay the tax" on a lotto win is a scam sign: the tax comes out of the prize, never in advance (how to spot a scam).

Lotto tax vs casino jackpot tax

Both use Section 24(B)(1) and the same 20% rate, but the ₱10,000 exemption is written for "Philippine Charity Sweepstakes and Lotto". Casino jackpots fall under BIR Revenue Memorandum Circular No. 57-2026, which names no minimum and says the tax base is the gross amount; see tax on casino and gambling jackpot winnings.

If your prize is close to the ₱10,000 line, the BIR can confirm how it applies. If buying tickets has become hard to stop, see help and self-exclusion.

All PCSO games, prices and odds on one page: PCSO lotto guide.