Game Show Taxation

Under Section 61 of the Internal Revenue Code, nearly all forms of income are subject to taxation unless specifically excluded. This definition extends from salaries and wages to income from tips and bonuses, all the way to income received from competing on a game show.

Game show winnings have sparked controversy in the past as contestants on shows like Jeopardy and The Price is Right often win big prizes, but they are then saddled with a big tax bill. As documented by the San Francisco Chronicle, the value of all winnings, whether in cash or prize format, is considered taxable income and subject to taxation. All else equal, a contestant would rather win something than not win something. However, the unexpected tax bill can sometimes be problematic.

For instance, let’s say a contestant wins a trip valued at $10,000. This trip does not actually come free to the contestant. Instead, the winner will receive the trip as well as a tax form documenting that they received something worth $10,000. Come the next year’s tax season, that $10,000 will be added to the taxpayer’s taxable income. If the taxpayer is in the top tax bracket, they will owe an additional $3,700 in income taxes.

Tax Liability For Survivor Winners

Season 49 winner Savannah Louie recently made headlines when discussing her Survivor-related taxes. As discussed by E! News, after Louie was announced as Season 49’s sole Survivor, she received a check for $1 million. However, she then had to write a check for $380,000 to cover her tax liabilities.

The tax bill is so significant because winning $1 million automatically puts the contestant in the top income tax bracket – a marginal tax rate of 37% for single taxpayers earning $640,601. Even if the taxpayer does not earn any other money throughout the year, the contestant would owe approximately $320 thousand in federal U.S. income taxes. This type of tax bill has hit past contestants, like Season 1 winner Richard Hatch, particularly hard, as he faced tax legal complications for failing to report his winnings.

Furthermore, the winner owes taxes at the state level depending on the their residence. This state income tax liability can range from 0% in nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington & Wyoming) to Arizona’s flat 2.5% rate, all the way to 13.3% in California. Thus, a wealthy taxpayer living in California can owe over 50% of their Survivor winnings to taxes.

Survivor 50 Winner Taxation

(Spoilers included below)

The original Survivor 50 prize stood at $1 million. However, in an appearance by Mr. Beast on the show this season, Rick Devens correctly flipped a coin to double the grand prize to $2 million.

While the winner of the show has yet to be announced, Kalshi currently shows that Aubry Bracco is the heavy favorite. In fact, her odds of winning currently sit at 98%. While this implied probability in no way assures that Bracco is the winner, signs appear to be pointing in that direction. Assuming she comes out victorious tonight, she will be the big victor, but so will the U.S. government and the state of Oregon.

According to Parade, Bracco most recently resided in Oregon. The state of Oregon applies a steep 9.9% income tax rate on income over $125,000. This means that Bracco will owe over $160,000 to Oregon for her income taxes as well as over $640,000 to the federal government. While this calculation includes many simplifying assumptions (no other income, state of residency, standard deduction, among others), it highlights that she will be on the tax hook for a big portion of her prize.

Despite the significant tax liability associated with winning Survivor 50, the victor will still take home over $1 million in after-tax earnings. Potentially more important for the contestant, the winner will be crowned the winner of one of the most competitive seasons of Survivor we have ever witnessed.