Arctic thaw lakes are an important source of water for aquatic ecosystems, wildlife, and humans. Many recent studies have observed changes in Arctic surface waters related to climate warming and permafrost thaw; however, explaining the trends and predicting future responses to warming is difficult without a stronger fundamental understanding of Arctic lake water budgets. By measuring and simulating surface and subsurface hydrologic fluxes, this work quantified the water budgets of three lakes with varying levels of seasonal drainage, and tested the hypothesis that lateral and subsurface flows are a major component of the post-snowmelt water budgets. A water budget focused only on post-snowmelt surface water fluxes (stream discharge, precipitation, and evaporation) could not close the budget for two of three lakes, even when uncertainty in input parameters was rigorously considered using a Monte Carlo approach. The water budgets indicated large, positive residuals, consistent with up to 70% of mid-summer inflows entering lakes from lateral fluxes. Lateral inflows and outflows were simulated based on three processes; supra-permafrost subsurface inflows from basin-edge polygonal ground, and exchange between seasonally drained lakes and their drained margins through runoff and evapotranspiration. Measurements and simulations indicate that rapid subsurface flow through highly conductive flowpaths in the polygonal ground can explain the majority of the inflow. Drained lakes were hydrologically connected to marshy areas on the lake margins, receiving water from runoff following precipitation and losing up to 38% of lake efflux to drained margin evapotranspiration. Lateral fluxes can be a major part of Arctic thaw lake water budgets and a major control on summertime lake water levels. Incorporating these dynamics into models will improve our ability to predict lake volume changes, solute fluxes, and habitat availability in the changing Arctic. Published 2016. This article is a U.S. Government work and is in the public domain in the USA.