The Powerball jackpot for Monday’s drawing is $905 million, the eighth largest grand prize in the game’s history. The nearly $1 billion jackpot is for a single-winning ticket who chooses an annuity option, paid over 30 years. Winners almost always opt for cash prizes, which would be $391.9 million.
Taxes on Winnings
However, the windfall would significantly shrink after taxes. The prize is subject to an automatic federal withholding, with the IRS levying 24% on winnings of more than $5,000. If you choose the $391.9 million cash option, the 24% withholding automatically reduces your prize to about $297.84 million, with $94 million going straight to Uncle Sam.
And when you file your 2026 returns, plan on paying another 13% in federal taxes. That’s because the millions you win from the lottery pushes you into the top tax bracket of 37%. Your total lottery prize after paying the federal income tax is $259.12 million.
State Taxes
There are also state taxes in most jurisdictions, which range from 2.9% in North Dakota to 10.9% in New York. But if you’re lucky enough to live in California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington or Wyoming, you won’t pay any state taxes on your winnings.
If you join a lottery pool with friends or co-workers, it’s essential to document that the entire windfall isn’t yours or you’ll be responsible for income tax withholding on the entire winnings. Experts suggest working with a tax professional, financial advisor, and estate planning attorney immediately to minimize taxes and protect your winnings.
Original reporting: NBC10 Boston — read the source article.
