The Powerball jackpot has reached $1 billion, but a winner would only take home around $350 million after taxes. Federal and state taxes can take up to 37% of the winnings, leaving the winner with a significantly reduced amount.
WASHINGTON The Powerball jackpot has hit 1 billion again ahead of Saturday night's drawing. But if you somehow beat the lottery's astronomical odds you'll have a hefty tax bill waiting for you. That's because lottery winnings are treated as income by the federal government and most states so the jackpots are subject to state and federal income taxes. However there are a handful of states that do not collect additional taxes on residents' lottery winnings. When a lottery winner comes forward they must first decide whether they want to receive their winnings in a 30-year annuity or receive their grand prize in a lump sum of cash. If they pick the annuity they will eventually receive the entire advertised jackpot over the span of three decades. Most jackpot winners go with the lump sum which means they get the cash value of that jackpot. For Saturday's Powerball jackpot the cash value was announced as about 461.3 million. Right away 24 of that cash value is withheld for federal taxes and goes to the IRS TurboTax explains. So in the scenario where just one person wins the Powerball and selects that cash option around 110 712 000 of Saturday's estimated prize would be withheld dropping it to 350 588 000. But even then you're not off the hook quite yet for taxes. Because the federal government counts lottery winnings as income getting such a large jackpot would likely move the winner into a higher tax bracket in which their income is taxed at 37. So when the winner next files their taxes theyll likely have to give the IRS another 13 of that prize. In most states the tax is taken from the prize money before its ever given to the winner. Details on when and how much the winner pays differ by state. There are only eight states and Puerto Rico where Powerball is played that don't take more state taxes for a persons lottery winnings according to the Tax Foundation and USA Mega an online multi-state lottery resource unaffiliated with the lotteries themselves. Those states are California Florida New Hampshire South Dakota Tennessee Texas Washington and Wyoming. According to estimates from USA Mega the winner of a publicized 1 billion jackpot would earn 290 661 980 if theyre from one of the states that doesn't tax winnings and take the lump sum option. But for example if you're from New York which has the highest state tax withholding the net payout would drop to 240 380 280 according to USA Mega estimates. The following list shows the Powerball lump-sum cash amount after taxes for all 50 states the District of Columbia Puerto Rico and the U.S. Virgin Islands according to an analysis from usamega.com. Does not offer Powerball Does not offer Powerball 279 129 480 cash payout 272 671 280 cash payout 290 661 980 cash payout 270 364 780 cash payout 258 417 110 cash payout 260 216 180 cash payout 290 661 980 cash payout 266 720 510 cash payout Does not offer Powerball 264 390 945 cash payout 267 827 630 cash payout 276 822 980 cash payout 273 132 580 cash payout 264 367 880 cash payout 272 209 980 cash payout 276 822 980 cash payout 257 679 030 cash payout 246 838 480 cash payout 249 144 980 cash payout 271 056 730 cash payout 245 223 930 cash payout 270 364 780 cash payout 268 980 880 cash payout 263 445 280 cash payout 266 674 380 cash payout Does not offer Powerball 290 661 980 cash payout 241 072 230 cash payout 263 445 280 cash payout 240 380 280 cash payout 271 056 730 cash payout 277 284 280 cash payout 276 246 355 cash payout 268 750 230 cash payout 244 993 280 cash payout 276 500 070 cash payout 290 661 980 cash payout 263 030 110 cash payout 262 061 380 cash payout 290 661 980 cash payout 290 661 980 cash payout 290 661 980 cash payout 290 661 980 cash payout Does not offer Powerball 250 298 230 cash payout 264 137 230 cash payout 290 661 980 cash payout 241 072 230 cash payout 268 427 320 cash payout 255 372 530 cash payout 290 661 980 cash payout The Powerball drawing takes place live at 10 59 p.m. ET every Monday Wednesday and Saturday. Tickets cost 2 per play and are sold in 45 states the District of Columbia Puerto Rico and the U.S. Virgin Islands. To stream KING 5 on your phone you need the KING 5 app. Next up in 5 Example video title will go here for this video Next up in 5 Example video title will go here for this video In Other News