Many people are curious about how much money a Powerball® jackpot lottery winner takes home after taxes, especially with recent record-high jackpot amounts.
As the Powerball jackpot soars to nearly $740 million, many are likely dreaming about what life would look like as an instant multimillionaire.
That's because, despite the odds of winning the massive prizes being about one in 292.2 million, there have been frequent instances of single-winning Powerball tickets such as last year's $2.04 billion, $1.08 billion and $1.765 billion.
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According to lottery officials, the $1.787 billion prize from September is the second-largest jackpot in U.S. history. (Two tickets matched all six numbers in the September 6 Powerball® drawing. Winners in Missouri and Texas will split the jackpot.)
But before anyone starts planning to buy private jets or seaside mansions, it’s worth remembering: The IRS and state governments will take a big slice of the prize.
Now the question is, how much will the next winner take home after taxes?
More from Kiplinger | States That Won't Tax Your Powerball Winnings
Powerball winning numbers
Before we dive into Powerball taxes, let's review what it takes to win.
To win the Powerball® jackpot, you must match six numbers from the Powerball drawing. (That's five numbers plus the Powerball.) The drawings take place every Monday, Wednesday and Saturday at 10:59 p.m. ET.
You can confirm the winning numbers from the last drawing on Powerball's website. If no one matches all six numbers, the Powerball rolls, and the jackpot amount increases.
How much is the Powerball payout?
The advertised cash value of the lottery changes with each drawing.
Two tickets won the jackpot following the September 6 drawing. The jackpot had rolled to $1.786 billion. (That's an estimated cash value of $826.4 million.)
“With final ticket sales, the Powerball jackpot came in at $1.787 billion — making it the second-largest U.S. lottery jackpot ever won, trailing only the world-record $2.04 billion Powerball jackpot won in California on November 7, 2022,” Powerball officials stated in a release.
*Two tickets from Saturday's drawing won the $2 million prize, and 18 tickets hit the $1 million prize.
Powerball taxes: Lump sum payout or annuity?
If anyone wins the Powerball or another lottery prize, they can choose to receive the payout in one of two ways.
- They can receive the payout as an annuity, which would be paid in 30 graduated payments over 29 years.
- They can receive the money in a lump sum payment.
Most lottery winners choose the lump sum payout.
Note: Opting for the annuity payout could offer a reliable income over time, but it's important to account for inflation. Assuming, for example, an average inflation rate of 2% per year, the real value of your final payment in 29 years would be much lower than your initial payment.
For instance, an annual payment of $33 million today would only have a purchasing power of about $77.8 million after 29 years, taking some level of inflation (about 3%) into account.
In either case (annuity or lump sum), billions of dollars (as in the case of a recent $842.4 million jackpot) is a bunch of money, and $425.2 million (the cash value of that jackpot) is a huge lump sum. Any lucky lottery winner will also be looking at significant tax bills.
One of those tax bills will be from the federal government and, depending on where a winner lives, another could come from the state. The amount of tax a winner will have to pay will depend on factors including the payout option that the winner chooses and the applicable state tax rate.
That’s because some states don’t tax lottery winnings. Meanwhile, other states have tax rates for lottery winnings that generally range from about 3% to almost 11%.
But in any case, once applicable taxes are taken out, the amount of money that any jackpot winner would walk away with will be much less than the multimillions splashed across lottery news headlines.
Powerball after taxes: How much do you take home?
If you're the lucky winner of a massive jackpot or other lottery cash prizes from a Powerball or Mega Millions drawing, you'll want to take some deep breaths and secure and protect your winning ticket.
You'll likely want to work with a qualified financial adviser to consider and plan for the various tax implications of winning the lottery.
When anyone wins the lottery, the IRS withholds 24% of the winnings off the top. With a large jackpot, if the winner opted for the lump sum cash value, they would be subject to federal income tax at the top tax rate, which is 37%. (After the 24% off the top, that's another 13% for some winners in remaining federal taxes).
For 2025, the top (i.e., 37%) federal income tax bracket applies to single filers with more than $626,350 in income and joint filers with income more than $751,600. Due to inflation, federal income tax brackets are adjusted each year.
State tax on lottery winnings
On the state side, most states treat lottery winnings as income for tax purposes and the tax rates vary by state.
But the jackpot winner’s state taxes could still amount to a huge sum given the size of the most recent Powerball lottery jackpot.
For more information, see States That Won't Tax Your Powerball Winnings.
Beyond federal and state taxes, some lottery winners face additional tax burdens from local jurisdictions. Some urban centers, counties and smaller municipalities impose their own taxes on lottery winnings.
For example, New York City residents can be subject to an additional 3.876% tax on their winnings applied on top of Empire State (10.90% withholding) and federal taxes.
Check any local tax requirements specific to your area.
What time is Powerball drawing?
Powerball drawing days are every Monday, Wednesday and Saturday at 10:59 p.m. ET.
Related: What Time is the Powerball Drawing?
How much is a Powerball ticket?
Tickets are $2 per play. Powerball tickets are sold in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Alabama, Alaska, Hawaii, Nevada and Utah are the five states that don't participate in Powerball.
This article has been updated to reflect the latest jackpot estimated amounts and details about the winning tickets.
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