Powerball numbers are on many people's minds since the jackpot soared again (it stood at $1.326 billion for the April 6 winning ticket) following another recent Powerball lottery jackpot prize of $1.76 billion.
However, it's important to remember that winning the lottery also means dealing with taxes. In some states, that means your actual payout could be much less than the advertised jackpot.
Although some states won’t tax your Powerball winnings, many states will, and some have higher tax rates than others.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Powerball after taxes: Highest lottery tax states
Here are the states with the highest lottery tax rates. (It is important to note that you will also pay federal taxes on your Powerball prize.
Generally, 24% comes off the top for federal income tax. You will likely pay additional tax on your income when you file your return at a rate that depends on your income tax bracket.)
Related: Powerball Jackpot Winner Will Get a Hefty Tax Bill
New York
New York state tax rate on lottery winnings: 10.90%
According to New York state law, if the proceeds from your lottery win are $5,000 or less, the prize payment isn’t considered New York source income.
So smaller prize money amounts won’t be subject to New York income tax. (In New York, “proceeds” are the total amount of the prize minus the cost of the winning ticket.)
Note: A Powerball ticket costs $2 per play.
Maryland
Maryland tax rate on lottery winnings: 8.75%
Maryland will deduct 8.95% of state tax if you’re a resident and your prize exceeds $5,000. If you’re a non-resident, the state tax withholding rate on your lottery winnings will be 8%.
Remember, the state tax is in addition to the 24% initial withholding for federal taxes. Also, you are required to report your lottery winnings on your tax return since the Maryland lottery says prizes from $601 to $5,000 may be taxable.
Washington, DC
Washington, DC tax rate on lottery winnings: 8.5%
Washington, DC, isn't a state. However, according to the District of Columbia’s Office of Lottery and Gaming, winnings over $5,000 are subject to an 8.5% tax rate for District income tax.
However, under Washington DC regulations, all lottery winnings that exceed $600 are reported to the District Office of Tax and Revenue.
Honorable Mentions: Oregon and New Jersey
Oregon tax rate on lottery winnings: 8%
Oregon withholds an 8% state tax on lottery prizes of $1,500 or more. So, your lottery prize payout comes minus the 8% state tax. The state reminds taxpayers that any large lottery prize is considered taxable income.
However, the Oregon Lottery provides guidance on its website regarding lump sum vs. annuity payouts and taxes.
“An annuity option pays out a larger amount of dollars over 30 years, but each annuity payment would be subject to tax. A one-time lump sum cash payment pays out less overall but, as it comes in a single payment, gets taxed at payout.”
New Jersey tax rate on lottery winnings: Up to 8%
According to the state’s lottery, New Jersey taxes lottery prizes of more than $10,000 and up to $500,000 at a rate of 5%.
But since we’re talking about a massive Powerball jackpot, the state’s higher 8% withholding tax rate applies to a lottery prize greater than $500,000.
Winners receive a Form W2-G at the end of the year. That form shows the amount of lottery prize winnings that should be reported as income and the amount of federal and state taxes withheld.
Powerball numbers
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 find 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.
Related Content
-
The Five Best Side Hustles for RetireesMore older people are working in retirement to boost income and stave off boredom. These gigs and hustles make the most sense for the golden years crowd.
-
Apple Rolls Out AppleCare One to Simplify and Expand Device ProtectionApple's new multi-device plan brings extended coverage, theft protection and the ability to insure older gadgets.
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund next year, a smaller one, or something in between. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ PocketsTax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
Why Your Summer Budget Feels Tighter: Tariffs Push Up InflationTariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
-
Alabama Tax-Free Weekend 2025Tax Holiday Here’s everything you need to know about the 2025 back-to-school Alabama sales tax holiday.
-
Key 2025 Tax Changes for Parents in Trump's MegabillTax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
Mississippi Tax-Free Weekend 2025Tax Holiday Just in time for Prime Day, Mississippi celebrated a tax holiday in July. Find out what back-to-school essentials were included.
