Record Powerball Jackpot Jumps To $2.3 Billion After No Ticket Wins Monday’s Draw—Here’s How Much Tax A Winner Would Pay

TOPLINE 

No one bagged Monday night’s enormous Powerball jackpot, sending the prize soaring to a record-breaking $2.3 billion for the next draw, the lottery said, though any lucky winner will face a hefty tax bill and take home much less than the headline prize—here’s how much.

Wednesday's Powerball has a jackpot of $1.2 billion. 

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KEY FACTS

Powerball lottery winners can choose between receiving the full prize as an annuity—a series of 30 payments paid over 29 years—or as a single lump sum payment.

The single payment is less than the advertised jackpot, which emphasizes the value of the annuity prize, but is the most popular option among winners and Wednesday’s cash prize is worth an estimated $1.12 billion.

PROMOTED

A mandatory federal tax withholding of 24% on gambling winnings would immediately reduce that amount by $269 million for a single prize winner, who would take home $851 million, though the taxman is far from finished.

The top federal marginal rate is 37%, meaning a single taxpayer with no other income, dependents or tax deductions like charitable giving would need to set aside an additional $145 million for taxes and can expect the overall prize to be whittled down to $706 million.

State and city taxes, depending on where the winner lives and where they bought the winning ticket, are very likely to eat into this sum further.

A winner opting for the annuity payment is set to receive around $77 million a year, though this would be reduced to $49 million by federal taxes and would likely be cut further by state and city taxes.