The Powerball jackpot has soared to $975 million, making it the fifth largest in the game’s history. After no tickets matched the winning numbers over the weekend, the jackpot continues to grow. However, the winner may end up taking home much less than the advertised amount due to taxes. If a winner is chosen on Monday, they will have the option of receiving the full amount in a 30-year annuity or a lump sum payment, which is taxed at 24%.
The lump sum payout, after taxes, would amount to $358.5 million. Depending on the winner’s taxable income, they could face a federal marginal tax rate as high as 37%, further reducing their prize. Choosing the annuity option means receiving annual installments that increase by 5% each year, but these payments are also taxed as income. Additionally, most states require winners to pay state taxes on their lottery winnings, with some states exempting winners from taxes altogether.
For example, winners in New York, which has a lottery tax rate of 10.9%, could receive as little as $245.7 million with the lump sum option and $509 million with the annuity option after all taxes are considered. The upcoming Powerball drawing is set for Monday night and will be livestreamed on the lottery’s website. If no winner is selected, the jackpot could exceed $1 billion, with history showing that jackpots have reached that amount only a few times before.
The largest Powerball jackpot ever was $2.04 million, claimed in California in 2022. So far in 2024, only one person has won the Powerball jackpot, receiving $842.4 million on New Year’s Day. The recent excitement over the Powerball comes on the heels of a Mega Millions jackpot win in New Jersey, where a lucky ticket holder will receive $1.128 billion, the fifth largest jackpot in that game’s history.
As the anticipation builds for the next Powerball drawing, players must consider not only their chances of winning but also the potential tax implications that could significantly reduce their prize money. The allure of hitting the jackpot and becoming an instant millionaire is strong, but winners must be aware of the financial realities they will face after taxes are taken into account. With the potential for the jackpot to exceed $1 billion if no winner is chosen, the excitement and interest in the Powerball game are at an all-time high.
