TAMPA, Fla. (WFLA/NEXSTAR) — It’s obvious that $1.73 billion is so much money that most of us wouldn’t know what to do with it.
However, just because someone wins the estimated $1.73 billion Powerball jackpot, that doesn’t mean they get to keep all that cash.
According to Powerball, whoever wins the jackpot during the next drawing, which is Wednesday, will have the option to claim a lump sum payment of $756.6 million or 30 annual payments that increase by 5% each year over a 29-year-old period.
Before getting your winnings, you’d have to pay a 24% tax withholding, which the IRS requires for winnings over $5,000, CNBC explains. Out of the $756.6 million cash value, that would be about $181.58 million you’ll lose up front.
However, because you’d be bumped into the top tax bracket (for those with incomes over $578,125 for single filers), the IRS says your tax burden would be 37%. That’s another $98.32 million out of your cash prize, according to an analysis by USA Mega.
Of course, there are also state lottery taxes. But you don’t have to worry about those if you win the jackpot in California — which does not have a state tax on lottery prizes.
If you pick up the winning ticket in Arizona, however, you’ll owe 2.5%. In Arizona, after all taxes, roughly $298.8 million would be withheld from the lump sum payout, leaving the winner (if they’re a single-filer) with about $457.8 million, USA Mega reports. The annuity payments, after all 30 have been dispersed, would work out to about $1.04 billion — roughly $680.3 million less than the estimated jackpot.
If the winner’s state has a lottery tax, they may still be on the hook come tax time for the newfound income. Unless, of course, the winner lives in a state without income tax: Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming (as well as Alaska and Nevada, but neither participates in Powerball).
The next drawing will be held Wednesday night at 10:59 p.m. ET.
Powerball tickets are $2 each and sold in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. In addition to Wednesdays, drawings are held every Monday and Saturday at 10:59 p.m. ET. You have a 1 in 292.2 million chance of winning the Powerball jackpot and a 1 in 24.9 chance of winning any Powerball prize.