What counts as a taxable prize
Taxable prizes include:
- Contest winnings
- Sweepstakes prizes that don’t involve a wager
- Promotional giveaways
- Door prizes
- Prizes from competitions
This applies to cash prizes, gift cards, merchandise, and travel packages alike, which are all taxed as ordinary income. Raffle and other gambling winnings are also taxable, but different reporting rules and forms may apply.
How noncash prizes are valued
A noncash prize is taxed based on its fair market value, the amount the item would ordinarily sell for, which isn’t necessarily what the sponsor paid for it. If you win a $799 laptop the sponsor bought wholesale for $500, you would generally owe tax on $799.
When you’ll get a Form 1099-MISC
| Prizes awarded | Reporting threshold |
|---|---|
| Before 2026 | $600 or more per sponsor, per year |
| 2026 and later | $2,000 for 2026, adjusted for inflation in later years |
Source: Internal Revenue Service
Multiple prizes from the same sponsor in the same year are added together toward that threshold.
You still owe tax below the threshold
Not receiving a 1099-MISC doesn’t make a prize tax-free. You’re responsible for reporting the value of every prize you win, regardless of whether the sponsor was required to report it.
Reporting prize winnings on your return
Prize income generally goes on Schedule 1 as other income, which flows to Form 1040. It generally isn’t subject to self-employment tax unless the prize was connected to your trade or business.
