Taxes on Powerball Winnings

The Powerball  lottery jackpot starts at $20 Million and grows rapidly from drawing to drawing. The main prize has no limit, allowing USA Powerball to offer the largest cash prizes in the world, which even exceeded 1 billion. How to receive lottery winnings?

Payout options of Powerball

Every player wonders: if you win the Powerball how do you get paid? Powerball rules has 2 main options Lumsum and Annuity.

Annuity

The jackpot amount can be paid by 30 installments over 29 years if a player does not wish to take all the money at once, the total sum of money is less than the declared prize, since it only includes the money of the prize fund of the current drawing. If a winner decides to choose the anunity the Jackpot is as announced and tax rate is the same 24% as in Lumpsum option.

Lumpsum

When a customer realizes that he is a lucky winner, an obvious question arises: how much money do lottery winners actually get? All the earnings are taxed, including the lottery winnings. In America, there are two main types of taxes, namely: Usually when the amount of the prize is more than 5 thousand dollars according to the US law the tax is 24% as well as additional amounts are charged. They depend on the customer’s annual income when declare taxes.

  1. Cash Jackpot is smaller than announced (it differs each draw, but in average the jackpot is about 75% of declared). If a declared Jackpot $100.000.000 so the cash amount is $75 million.
  2. Then the jackpot is reduced by Federal Tax which is 24%. So the winner will get $57 million jackpot.
  3. Then the rest amount of the jackpot will be taxed by local state taxes. Some stated doesn’t have taxes on lottery winnings, but the others has and the rates are in the table below.

The $100 jackpot after taxes is about $57 million.

Income tax by state

State Tax Rate
Alabama 2-5%
Alaska No
Arizona 2.59% -4.54%
Arkansas 0.9% -6.9%
California 1% -13.3%
Colorado 4.63%
Connecticut 3% -6.7%
Delaware 2.2% -6.6%
District of Columbia 4% -8.95%
Florida No
Georgia 1% -6%
Hawaii 1.4% -11%
Idaho 1.6% -7.4%
Illinois 3.75%
Indiana 3.3%
Iowa 0.36% -8.98%
Kansas 2.7% -4.6%
Kentucky 2% -6%
Louisiana 2% -6%
Maine 6.5% -7.95%
Maryland 2% 5.75%
Massachusetts 5.2%
Michigan 4.25%
Minnesota 5.35% -9.85%
Mississippi 3% -5%
Missouri 1.5% -6%
Montana 1% 6.9%
Nebraska 2.46% -6.84%
Nevada No
New Hampshire 5%
New Jersey 1.4% -8.97%
New Mexico 1.7% -4.9%
New York 4% -8.82%
North Carolina 5.75%
North Dakota 1.22% -3.22%
Ohio 0.53% -5.33%
Oklahoma 0.5% -5.25%
Oregon 5% -9.9%
Pennsylvania 3.07%
Rhode Island 3.75% -5.99%
South Carolina 0% -7%
South Dakota No
Tennessee 6%
Texas No
Utah 5%
Vermont 3.55% -8.95%
Virginia 2% -5.75%
Washington No
West Virginia 3% -6.5%
Wisconsin 4% -7.65%
Wyoming No

Taxes for winners from India

All US nonresident Powerball winners are taxed by flate 30% rate. For Example, if a winner from India who bought a ticket at Lottosmile, wins a $100.000.000 jackpot he get around $52.500.000 in cash.

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