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 like last year's $2.04 billion and July's $1.08 billion. Despite the odds of winning the massive prizes being about one in 292.2 million, there have been frequent instances of single-winning tickets.
And Oct. 11 is no exception. A single ticket from California won the 10/11/23 jackpot. The $1.765 billion prize is the second-largest jackpot in U.S. history according to lottery officials.
So, the question is, how much will the winner take home after tax?
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But, before diving into the details of a winner's tax liabilities, let's review Powerball numbers and payouts.
More from Kiplinger | States That Won't Tax Your Powerball Winnings
Powerball numbers: Did someone win?
A single ticket in California won the October $1.76 billion jackpot.
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.
How much is the Powerball payout?
The advertised cash value of the lottery changes with each drawing.
For example, the recent $1.76 billion Powerball jackpot had an estimated cash payout of about $774.1 million.
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 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 the most recent winning $1.765 billion jackpot) is a bunch of money and $774.1 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. (That's good news for the October California winner.) 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 multi-millions 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 will want to take a couple of 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 really 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 another 13% for some winners in remaining federal taxes).
For 2023, the top (i.e., 37%) federal income tax bracket applies to single filers who have more than $539,900 in income and joint filers with income over $647,850. Due to inflation, federal income tax brackets have been adjusted upward.
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.
Powerball drawing time
Powerball drawing days are every Monday, Wednesday, and Saturday at 10:59 p.m. ET.
How much does a Powerball ticket cost?
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.
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