Powerball Jackpot Swells To $1.5 Billion After No Ticket Wins Wednesday’s Draw—Here’s How Much Tax A Winner Would Pay
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Powerball Jackpot Swells To $1.5 Billion After No Ticket Wins Wednesday’s Draw—Here’s How Much Tax A Winner Would Pay

Updated Nov 3, 2022, 05:05am EDT

Topline

No one bagged Wednesday night’s billion-dollar Powerball draw, sending the jackpot soaring to a nearly record-breaking $1.5 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.

More From Forbes

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 Saturday’s cash prize is worth an estimated $746 million.

A mandatory federal tax withholding of 24% on gambling winnings would immediately reduce that amount by $179 million for a single prize winner, who would take home $567 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 $97 million for taxes and can expect the overall prize to be whittled down to $470 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 $50 million a year, though this would be reduced to $31.5 million by federal taxes and would likely be cut further by state and city taxes.

Key Background

The grand prizes up for grabs in lottery jackpots have soared in recent years. Huge jackpots are a feature, not a bug, of lottery design and the rules are structured to make it easier to win but harder to win big. The Powerball has been drawn 39 times without a jackpot winner, the last of which was in August, the lottery said, and Saturday’s upcoming draw marks the lottery’s second-largest jackpot in its history and the third-largest lottery prize in U.S. history. Though there was no jackpot winner for Wednesday night’s draw, Powerball said more than 7.2 million tickets won cash prizes totaling nearly $75 million. Of these, 16 tickets matched all five white balls to win $1 million, three of these having opted to double their winnings through an additional $1 a play.

Tangent

The odds of winning the lottery are slim, around 1 in 292.2 million, according to Powerball. They are not in the players’ favor. By comparison, the odds of being struck by lightning in a given year are less than 1 in 1 million, according to the CDC, and the odds of being attacked and killed by a shark are around 1 in 4.3 million, according to Florida Museum’s International Shark Attack File.

Big Number

$1.59 billion. That’s the value of Powerball’s largest jackpot, which was shared between three winners in California, Florida and Tennessee in January 2016. The lottery said this prize holds the world record for the largest lottery jackpot.

What To Watch For

Saturday’s Powerball drawing is set to broadcast live at 10:59 p.m. ET from the Florida Lottery studio. The drawings are also live streamed online at Powerball.com.

Further Reading

Powerball Jackpot Hits $1 Billion—Here’s How Much A Winner Would Actually Take Home After Taxes (Forbes)

Mega Millions: Do This If You Win The $1 Billion Lottery Jackpot (Forbes)

Powerball jackpot hits $1B again. An expert says it’ll happen more often. (WaPo)

Yes, The Powerball Jackpot Is Over A Billion Dollars, But Here’s Why You Shouldn’t Buy A Ticket (Buzzfeed News)

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