Many people are curious about how much money a Powerball jackpot lottery winner takes home after taxes, especially with the increasing payout and record-high jackpot amounts.
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 like last year's $2.04 billion, $1.08 billion, and $1.765 billion. The October prize goes down as the second-largest jackpot in U.S. history according to lottery officials.
So, now that the jackpot for the next Powerball drawing has a $1.326 billion winning ticket, the question is, how much will the winner take home after tax?
To win the Powerball jackpot, you must match six numbers from the Powerball drawing. The drawing takes 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.
Next Powerball drawing amount: How much is the Powerball payout?
The advertised cash value of the lottery changes with each drawing. For the April 6 drawing, the jackpot stood at an estimated $1.326 billion. (That's an estimated payout of $621.0 million.)
For comparison, a recent $1.76 billion Powerball jackpot had an estimated cash payout of about $774.1 million.
Powerball taxes: Lump sum payout or annuity?
(Image credit: Getty Images)
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 thirty graduated payments over 29 years, or
They can receive the money in a lump sum payment.
Most lottery winners choose the lump sum payout.
In either case, while 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 are the lucky winner of a massive jackpot or other lottery cash prizes from a Powerball or Mega Millions drawing, you will want to take some deep breaths and secure and protect your winning ticket. Then, you will likely want to work with a qualified financial advisor to consider and plan for the various tax implications of winning the lottery.
That's because 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%. (So after the 24% off the top, that is another 13% for some winners in remaining federal taxes).
For 2024, the top (i.e., 37%) federal income tax bracket applies to single filers with more than $609,350 in income and joint filers with income over $731,200. Due to inflation, federal income tax brackets are adjusted each year.
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.
What time is Powerball drawing?
Powerball drawing days are every Monday, Wednesday, and Saturday at 10:59 p.m. ET.
As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.
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