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Powerball payout and tax calculator

Glossary of Terms

Advertised Jackpot: The total payment a winner would receive should they choose the annuity option for any given drawing. This number is based on the funds in the prize pool (including all prior rollovers), expected ticket sales for the next drawing, and current market interest rates.

Annuity Payout Option: Payment scheme wherein prizes are awarded starting with 1 immediate payment followed by 29 yearly payments. These payments are graduated – meaning they increase by 5% each year to account for inflation. The total value of all payments is equivalent to 100% of the advertised jackpot.

Lump Sum Option: Payment scheme wherein a one-time payment is immediately awarded to the winner. The total value is approximately 61% of the advertised jackpot. This is also known as the cash option, and is the more popular choice among jackpot winners.

Federal Taxes: Income tax withheld by the US government, including income from lottery prize money. This can range from 24% to 37% of your winnings.

State Taxes: Additional tax withheld, dependent on the state. This varies across states, and can range from 0% to more than 8%.

Tax Liability: The taxes you will have to pay in order to receive your prize. This is computed as federal taxes + state taxes. Please note that in some cases, you might have to pay additional taxes.

Gross Payout: The total prize awarded to a winner before federal and state taxes are applied.

Net Payout: The remaining prize awarded to a winner after federal and state taxes are applied.

Our Powerball Calculator Explained

As you might already know, when a player wins the Powerball jackpot, they have to choose between a single lump sum or 30 annual payments to receive their prize.

Choosing the lump sum, also known as the cash option, reduces the jackpot size to approximately 61% of the original amount, but awards it all at once to the player. On the other hand, the annuity option awards the winner with the full amount or 100% of the jackpot – starting with one initial payment, followed by annual payments over the next 29 years.

Since the lump sum and annuity option award different payouts, it only follows that your tax liability (federal tax + state tax) will also be different for both.

What our Powerball calculator provides is a quick overview of the gross and net (after taxes) winnings you’d receive for both options – allowing you to make a more informed decision when comparing the two.

Finally, as an added feature, our tool also breaks down the annuity option into a handy payout schedule so you know how much you’ll receive each year.

Note: Payouts are approximations. For example, large charitable donations can be written off, meaning reduced tax liabilities.

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