Powerball jackpot hits $1 billion. If you happen to win, here is the tax invoice

The jackpot for Powerball’s Monday evening drawing is a whopping $1 billion.

Kind of, anyway.

The marketed quantity represents the pretax quantity you’d get should you have been to obtain your windfall as an annuity unfold over three a long time. But most jackpot winners select the upfront one-time money cost — which, for this drawing, is lower than half the annuitized quantity and likewise is a pretax determine: $497.3 million.

The annuity possibility is greater than it has been, relative to the money possibility, on account of greater rates of interest that make it potential for the sport to fund bigger annuitized prizes, based on the Multi-State Lottery Affiliation, which runs Powerball. The money possibility, nevertheless, is pushed by ticket gross sales.

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So what would you pay in taxes should you have been to beat the percentages and land the jackpot?

Assuming you have been like most winners and selected the money possibility, a 24% federal tax withholding would scale back the $497.3 million by $119.4 million.

But extra would possible be as a result of IRS at tax time. The highest federal earnings tax price is 37% and this 12 months applies to earnings above $539,900 for particular person tax filers and $647,850 for married {couples}. Subsequent 12 months, the highest price is imposed on earnings above $578,125 (people) and $693,750 (married {couples}).

Which means that until you have been in a position to cut back your taxable earnings by, say, making charitable donations, one other 13% — or about $64.7 million — could be as a result of IRS. That might translate into $184.1 million going to federal coffers in all, leaving you with $313.2 million.

State taxes is also due, relying on the place the ticket was bought and the place you reside. Whereas some jurisdictions don’t have any earnings tax — or don’t tax lottery winnings — others impose a prime tax price of greater than 10%.

However, the winner would find yourself with extra money than most individuals see in a lifetime or two. 

And, in fact, you most likely will not want to fret about how a lot the jackpot actually would ship — the prospect of a single ticket matching all six numbers drawn in Powerball is about 1 in 292 million.

In the meantime, Mega Thousands and thousands’ jackpot is $87 million ($42.8 million money) for Tuesday evening’s drawing. The prospect of your ticket hitting the jackpot in that sport is roughly 1 in 302 million.