Powerball Taxes Calculator (2024)

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Powerball prizes are subject to tax so it is not just a case of looking at the advertised amounts to see how much money you would receive if you won. The rate of withholding depends on how much you win and the jurisdiction in which you buy your ticket. A federal tax is levied on all winners of prizes greater than $5,000, while many of the participating states apply their own tax on top of this. In addition, some locations, such as New York City, levy a local tax on lottery winnings.

You can find out how much tax you might have to pay below. As it is such a complex issue, you should consult a financial expert in the event of a big lottery win so that you're fully aware of your tax obligations.

Use the Tax Calculator

Federal Taxes on Lottery Winnings

Lottery winnings are treated as income in the United States, so your final tax bill depends on how much money you make in total in a year, not just the amount you win in the lottery. The following table shows the federal tax obligations for a Powerball winner filing as a single taxpayer. The rates you pay may differ depending on your individual circumstances.

PrizeFederal Tax Obligations
$0-$600No deductions
$600.01 - $5,000Winnings must be reported on federal income tax form
$5,000.01 and above24-37%, depending on prize amount

Federal tax rules are consistent across the U.S. You do not have to pay tax on any prize up to $600, but you must report your winnings to the Internal Revenue Service (IRS) if you win an amount between $600.01 and $5,000. You will be issued a W-2G form to complete with your tax returns.

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A federal tax of 24 percent will be taken from all prizes above $5,000 (including the jackpot) before you receive your prize money. You may then be eligible for a refund or have to pay more tax when you file your returns, depending on your total income. If you win the jackpot you will be subject to the top federal tax rate of 37 percent. Players who are not U.S. citizens are subject to an initial federal tax payment of 30 percent rather than 24 percent.

Deductions for Gambling Losses

Playing the lottery is classed as gambling as far as the Internal Revenue Service (IRS) is concerned, which means that you are entitled to a tax deduction on any losses incurred. To file these deductions, you will need to keep an accurate record of your wins and losses, as well as any evidence of them, such as the tickets you bought. You must itemize the deductions on the tax form 1040, obtainable from the IRS website. The losses you deduct cannot exceed your income from all forms of gambling, including but not limited to horse racing, casinos, and raffles.

If you win the jackpot and take the annuity payout, the annual payments will be recorded individually in each tax year, and will count towards your gambling income for that year. This should be taken into consideration when recording wins and losses for tax deduction purposes.

State Taxes

In addition to federal taxes, your Powerball winnings may also be subject to state taxes. It is important to remember that the tax levied on your prize will not only vary by state but also depending on your individual circumstances.

The following table shows the rate of withholding for each participating jurisdiction, along with the threshold for when prizes start to be taxed at a state level.

State WithholdingJurisdictionThreshold for State Tax
No state tax on lottery prizesCalifornia, Florida, New Hampshire, Puerto Rico, South Dakota, Tennessee, Texas, U.S Virgin Islands, Washington State, WyomingN/A
2.9%North Dakota$5,000
3.07%Pennsylvania$5,000
3.23%Indiana$1,200
4%Colorado, Ohio, Oklahoma, Virginia$5,000
4%Missouri$600
4.25%Louisiana, Michigan$5,000
4.8%ArizonaUndisclosed
4.9%ArkansasUndisclosed
4.95%Illinois$1,000
3-5%Mississippi3% for prizes from $600 to $5,000, 4% for prizes between $5,001 and $10,000, and 5% for prizes above $10,001
5%Iowa, Kansas, Massachusetts, Nebraska$5,000
5%KentuckyUndisclosed
5-8%New Jersey5% for prizes above $10,000 and up to $500,000. 8% for prizes above $500,000
5.25%North CarolinaUndisclosed
5.75%Georgia$5,000
5.99%Rhode Island$5,000
6%New Mexico, Vermont$5,000
6.5%Idaho, West Virginia$5,000
6.5%South Carolina$500
6.6%Delaware$5,000
6.9%Montana$5,000
6.99%Connecticut$5,000 (or winnings of $600 or more that are at least 300 times the amount of the wager placed)
7.15%Maine$5,000
7.25%MinnesotaUndisclosed
7.65%Wisconsin$2,000
8%Oregon$1,500
8.5%Washington D.C$5,000
8.95%Maryland$5,001
10.9%New York$5,000

Tax Calculator

Use the tax calculator below to calculate how much of your payout you would be taking home following the respective federal and state taxes that are deducted. Just enter the amount you have won and select your state. Then select if this was the jackpot or not, and if it was then choose whether you took the annuity option or cash lump sum. The lottery calculator will then show your final payout value after taxes.

Local Taxes

In addition to federal and state taxes, many cities, counties and municipalities in the United States levy a local income tax. This can vary greatly depending on the location, but in all cases it will be applied on top of any other income taxes. New York City, for example, applies a local tax of 3.876 percent in addition to the top state income tax rate of 10.9 percent and the top federal rate of 24 percent.

This means that a New York resident who opts for the cash lump sum payout of Powerball’s starting jackpot will end up with a final payout of roughly $8.4 million, just 42 percent of the advertised $20 million prize. Being aware of these rules before you make a prize claim can protect you from the shock of seeing millions of dollars slashed from your prize money.

Taxes for Lottery Pools

If you win a large prize as part of a lottery pool, you are still required to pay taxes on your winnings. Each member of the group will be liable to pay their share of taxes, so everyone will need to report the income when filing their returns. Some states make this easy, as they allow each member of a lottery pool to claim individually through a shared or multiple ownership claim. In these cases the prize money will be paid directly to each member of the pool and the appropriate taxes will be withheld at the point of payment.

It gets slightly more complicated when the entirety of the prize money is paid to one representative, who is then responsible for distributing the winnings to other people. In these cases, anyone receiving a share of the money who is not named as the actual winner will need to complete IRS form 5754 to report the income. This will need to be filled out by every member of the group except the named claimant before the prize money is distributed. Form 5754 must be filed by December 31st of the tax year in which the prize was paid.

In the event of a big prize win, you should contact your state lottery for further guidance about your tax obligations and what you need to do to report the income correctly.

Powerball Taxes Calculator (2024)

FAQs

How much will I pay in taxes if I win the Powerball? ›

Some tax is skimmed off immediately. The IRS requires that lottery agencies immediately withhold a 24% tax on lottery winnings exceeding $5,000, which reduces your actual take-home prize amount.

How much is the Powerball 750 million after taxes? ›

If a winner is found in the next draw, they will get to pick between receiving the $750 million jackpot split over 30 annual payments or a lump sum cash prize of $357.3 million—usually the popular choice. The lump sum prize drops to $271.5 million after a mandatory federal tax withholding of 24% is applied.

How much tax do you pay on 1.9 billion Powerball? ›

Some states also tax lottery winnings, meaning winners in Arizona and New York will need to fork over millions in additional taxes, though other states like California and Texas don't have lottery jackpot taxes.

How much would you actually get from Powerball lump sum? ›

The lump sum payout is automatically taxed at 24%, meaning the winner would actually receive $358.5 million after taxes. Based on their previous taxable income, the winner could then face a federal marginal tax rate as high as 37% on their winnings, potentially cutting the prize down further.

Do lottery winnings affect social security? ›

How About Your Retirement Benefits? Just like SSDI, social security retirement benefits are earned benefits. This means winning the lottery will have no impact on your retirement benefits. But it may impact your taxes on your benefits since lottery winnings have to be reported to the IRS.

How much is 1 billion lottery after taxes? ›

The lump sum cash prize will drop to $350.4 million after a mandatory federal tax withholding of 24% is applied. Depending on their taxable income, the winner could then face a federal marginal rate as high as 37%, further slashing their winnings to $290.4 million.

Does Powerball annuity end at death? ›

Whether the winner goes with the annuity or the cash option, lottery winnings can typically be inherited or transferred to the winner's beneficiaries and heirs.

How much is 2 billion Powerball after taxes? ›

That's one reason the winner should bank some of the money to be sure they have it on April 15. If you add the 24% withholding tax plus the 13% extra tax the winner will pay April 15 together, you get a federal tax of $369.1 million. The winner takes home $628.5 million after federal tax.

Is it better to take the lump sum or annuity lottery? ›

If you want your winnings right away, you'll want to select the cash option, but if you want more money in the end, you may prefer the annuity option.

How long does it take to get your money if you win the Powerball? ›

Your first annuity payment, or the single cash option payment, should arrive within six to eight weeks. There are generally no California state taxes for Lottery prizes, but we are required to withhold federal taxes.

Which states have no lottery tax? ›

All states except the following eleven, along with Puerto Rico and the U.S. Virgin Islands, do not tax national lottery winnings: Alaska, California, Delaware, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. All other states do tax national lottery winnings.

Are lottery annuity payments guaranteed? ›

It is true that lottery annuities are generally guaranteed, backed by the state or insurance companies that issue them. They offer a steady income over a period, typically 20-30 years, reducing the risk of spending all winnings at once. However, consider inflation and your financial goals before choosing an annuity.

Who is the biggest Powerball winner ever? ›

The largest Powerball jackpot in US history was won by Edwin Castro in Southern California, totaling $2.04 billion. The ticket was sold in Nov. 2022 at Joe's Service Center in an unincorporated community near Los Angeles. Here is a list of the largest jackpots won in the US and the state where the tickets were sold.

How much will I pay in taxes if I win a million dollars? ›

You must pay federal income tax if you win

You'll fall into the highest tax bracket in the year you win if you take the jackpot in a lump sum. For 2023 and 2024, this means you'll likely owe the IRS at least 37% in taxes.

Does Powerball cash value include taxes? ›

State taxes on Powerball wins

There are ten states and territories that do not tax lottery winners. They are: California.

Is it better to take lump sum or annuity Powerball? ›

If you want your winnings right away, you'll want to select the cash option, but if you want more money in the end, you may prefer the annuity option.

How much of the lottery do you actually get? ›

To start, 24% of your winnings are withheld for the IRS. How much that is depends on whether you went for the cash or annuity option, since you only pay taxes on what you receive in a given year.

What is the Powerball payout chart? ›

Detailed Draw Results for California
Matching NumbersWinning TicketsPrize Amounts
50$471,586
4 + Powerball0$26,129
436$362
3 + Powerball65$208
6 more rows

How much did Edwin Castro win after taxes? ›

After taxes, he reportedly walked away with a lump sum of US$628.5 million on Valentine's Day last year and swiftly became a media darling for how he has been spending his fortune. He is now reportedly dating a mystery woman, who he was spotted with earlier this month.

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