The Powerball jackpot rose to $1.2 billion—the third largest in the game’s history—after no single ticket matched all six numbers drawn on Monday night, although the total amount the eventual winner will take home will be far smaller after their tax bill.
File Photo: Powerball lottery tickets pictured inside a store in Homestead, Florida.
If a potential winner emerges in the next draw, they will have a choice between a $1.2 billion payout spread over 30 annual installments or a lump sum amount of $551.7 million—often the more popular choice.
If the lump sum amount is chosen, the payout will drop to $419.29 million after a mandatory 24% federal tax withholding.
Depending on their taxable income for the year, the winner could face a federal marginal rate of up to 37%, further dropping their winnings to $347.57 million.
If the installment option is picked, the winner’s annual payments of around $40 million could drop as low as $25.2 million, if the 37% federal marginal rate is applied.
Depending on their home state, the winner may owe further taxes, as some states like New York levy a 10.9% tax on lottery winnings, while others like Texas, Florida, and California don’t tax them.
The next drawing for the jackpot is set to take place on Wednesday night. The Mega Millions jackpot will have a drawing for an estimated $300 million prize on Tuesday night.
1-in-292.2 million. Those are the abysmal odds a ticket buyer will have to overcome to win the Powerball jackpot, although this is slightly better than the Mega Millions jackpot’s 1-in-302.6 million odds.
The 1.2 billion prize is the fourth biggest jackpot so far this year and also the fourth time in 2023 that a jackpot amount has breached the billion-dollar mark. In August, a single ticket sold in Florida won the $1.6 billion Mega Millions jackpot—the largest prize in that game’s history and the largest overall jackpot prize this year. Jackpot amounts hitting record numbers in recent years are the result of a deliberate tweak to the formulas of the lotteries, which has led to worse individual odds but higher jackpot sizes.
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