Car giveaways
Who pays the taxes when you win a car in a US giveaway
Taxes on a car prize depend on the rules. Here is what the rules we reviewed say about who pays, what a sponsor may cover, and when a form is issued.
By Daniel Whitfield, Editor · Updated November 2, 2026
A car prize is generally taxable income, so winning a car does not mean you pay nothing. Who pays what depends on the sponsor’s rules, so the answer for one giveaway may not be the answer for another. This article explains what the rules we reviewed say. It is not tax advice.
What the rules we reviewed say
- Dream Giveaway. The rules say the company pays part of the federal prize tax. For the 2026 Cadillac CT5-V Blackwing in draw 212, the amount is $31,000. The rest of the tax is the winner’s to pay. See the Dream Giveaway review.
- Arizona Diamondbacks Foundation. The rules say entries are not tax-deductible. The winner is responsible for income taxes, and federal withholding is applied as required. See the 25 Years of Heroes Car Raffle review.
- Mile High Raffle. The rules cite the IRS position that raffle payments are not deductible charitable contributions. The rules do not state how tax is paid on a prize. See the Mile High Raffle review.
- RMHC San Diego Giving Back Raffle. The rules say raffle payments are not gifts and are not deductible. The charity takes no responsibility for the winner’s tax. A W-2G form may be required for prizes of $600 or more. See the Giving Back Raffle review.
- MONOPOLY at McDonald’s. The rules say winners are responsible for all taxes. See the MONOPOLY review.
What the general position is
In general, US federal income tax applies to prizes, and the value counted is normally the fair market value of the prize on the date you receive it. A car’s fair market value can differ from its manufacturer’s suggested retail price (MSRP) or the retail value printed in the rules. State income tax may also apply, and rules differ between states. These are general points, not a statement of what you owe.
Watch for the tax payment itself
When a sponsor pays part of the tax, ask a tax professional whether that payment is treated as extra income to you. The answer depends on the facts, so do not assume either way. The same applies to any withholding taken from a prize.
Questions to ask before you enter
- Does the sponsor pay any part of the tax, and is the amount stated in the rules?
- Is any withholding applied at the time of the prize?
- Will you receive a form, such as a W-2G, and when?
- Are any state taxes stated in the rules, or are they left to you?
The short version
The rules decide the starting point, but you are usually responsible for the rest. Read the tax section of the rules before you enter, and speak with a tax professional about your own position if you win. For the general rules on prize tax, see our guide on lottery taxes.