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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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
-
Stocks Slide to Start September: Stock Market TodaySeasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
Here's What You'd Have If You Invested $1,000 Into Sherwin-Williams 20 Years AgoSherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
Another State Rebels Against Trump’s New 2025 Tax Law: What Now?State Taxes Even if states adopt tax policies in the so-called ‘big beautiful bill,’ lawmakers may have workarounds at their fingertips.
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
Stay NJ Could Give You $6,500: The Deadline You Can't MissProperty Taxes New Jersey has a new property tax relief program for 2025. The application deadline is approaching fast.
-
Social Security 2025: The Outdated Tax Rules Costing Retirees MoneyRetirement Taxes Could the Social Security 90th anniversary be a good time to revisit old tax thresholds?
-
The Fall Garden Tax? What to Plant and How to PrepareTax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.
-
Texas Sales Tax-Free Weekend 2025Tax Holiday Here's what you needed to know about the Texas sales tax holiday.
-
Retirees Should Watch These Four Key Tax Changes in 2025Tax Changes This year brings key tax changes that could affect your retirement taxes and income.
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
