The Powerball jackpot has reached $930 million, the seventh largest in the game's history. A single winning ticket would receive $429 million in cash, but after federal and state taxes, the winner would take home around $283.6 million.
The jackpot for Wednesday's Powerball drawing is 930 million the seventh largest grand prize in the game's history. The nearly 1 billion jackpot is for a single-winning ticket who chooses an annuity option paid over 30 years. Winners almost always opt for cash prizes which would be 429 million before taxes. Watch NBC 5 free wherever you are WATCH HERE However the windfall would significantly shrink after taxes. lottery Aug 22 How to play Powerball Which numbers are drawn the most? Mega Millions Jan 31 2024 What to know about playing the lottery (from a math professor who won) Create a free account with NBC 5 DFW to save articles and videos. LEARN MORE Federal taxes on lottery winnings The prize is subject to an automatic federal withholding with the IRS levying 24 on winnings of more than 5 000. If you choose the 429 million cash option the 24 withholding automatically reduces your prize to about 326 million with 103 million going straight to Uncle Sam. And when you file your 2025 returns plan on paying another 13 in federal taxes. That's because the millions you win from the lottery pushes you into the top tax bracket of 37. Your total lottery prize after paying the federal income tax is 283.6 million. Millions if not billions are up grabs once a winning lotto ticket goes unclaimed. What to know about who gets to keep it. State taxes on lottery winnings There are also state taxes in most jurisdictions which range from 2.9 in North Dakota to 10.9 in New York. But if you're lucky enough to live in California Florida New Hampshire South Dakota Tennessee Texas Washington or Wyoming you won't pay any state taxes on your winnings. And if you live in one of the five states that don't have a lottery (Alabama Alaska Hawaii Nevada and Utah) or purchased your winning ticket in a state you dont live in the state where you purchased your ticket may withhold state taxes on your winnings and youll also need to figure out how much you owe to your state at tax time. However you can usually claim a tax credit for the taxes paid to the other state. Be careful with pool winnings If you join a lottery pool with friends or co-workers TurboTax cautions the person claiming the prize on behalf of the group to document that the entire windfall isnt theirs or you'll be responsible for income tax withholding on the entire winnings. Also if you collect the total winnings and then allot everyone else their share the IRS may assume that you're giving the money away which can result in getting hit with a gift tax. The tax applies to gifts you give over 13.99 million or 27.98 million if you are a married couple for 2025. And it's taxed at a rate of 40 according to the IRS. Attorney Andrew Stoltmann says some of the most vicious legal fights over the lottery come from office lotto pools gone wrong. Heres what you need to know before you buy in. Have everyone enter into the pool with a written contract defining his or her shares which you can then provide to the IRS if necessary according to TurboTax. If you win the jackpot experts suggest working with a tax professional financial advisor and estate planning attorney immediately. It's all about protection and paying the least amount of taxes possible so working with professionals is very important said certified financial planner John Chichester Jr. founder and CEO of Chichester Financial Group in Phoenix. He said winners who choose the 30-year annuity payments option may have a lot more flexibility for tax planning. Attorney Andrew Stoltmann has represented 12 lottery winners many of whom lost all their winnings through bad investments reckless spending and greedy relatives. Unfortunately the people who win the lottery think at that point the journey is over. And what they dont realize is that the journey has really just begun says the Chicago-based Stoltmann