Powerball Jackpot Climbs to a Record $1.25 Billion
The Powerball jackpot has surged to a staggering $1.25 billion, following no winners in the latest draw. This marks the lottery’s sixth-largest prize in its history. However, potential winners should be aware of the taxes that will significantly reduce their actual take-home amount.
Powerball Prize Breakdown
To claim the jackpot, a ticket holder must match all five white balls and the red Powerball. Winners have the option to choose between two payout methods:
- 30 Annual Payments: This option pays out the total jackpot over a set period.
- Lump Sum Payment: A one-time cash payout of approximately $572.1 million is available.
Tax Implications
If the lump sum payout is chosen, mandatory federal taxes will significantly decrease the amount. After a 24% federal tax withholding, the payout drops to about $434.7 million. Depending on the winner’s income, the federal marginal tax rate could reach as high as 37%, resulting in a final amount of around $360.4 million.
Alternatively, if the winner opts for annual payments, they would receive approximately $26.2 million annually, assuming a 37% tax rate is applicable.
State Taxes on Lottery Winnings
In addition to federal taxes, state taxes can further impact lottery winnings. Here’s a brief overview:
- New York: Up to 10.9% state tax, reducing winnings to about $62.3 million.
- Arizona: Minimum state tax at 2.5%, resulting in approximately $14.3 million.
- California and Florida: No state tax on lottery winnings.
Upcoming Drawings
The next Powerball drawing is scheduled for Wednesday night. Additionally, the Mega Millions will conduct its next drawing on Tuesday night, featuring an $80 million jackpot. The cash option for Mega Millions is available at $36.2 million, which could decrease to around $27.5 million after a 24% tax, or as low as $22.8 million with a 37% marginal rate.
For more updates on lottery drawings and jackpots, stay tuned to El-Balad.
