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 live in California, Delaware (though the state does have additional taxes it collects), Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming — none of which have a state tax on lottery prizes.
Depending on where you live, you’ll owe anywhere from 5%, with an additional state tax due of 9% for the final rate, which is the state tax in Massachusetts, up to 8.82%, in New York (or more, if you live in New York City or Yonkers).
In Massachusetts, after all the taxes are withheld from the lump sum payout, the winner would be left (if they’re a single-filer) with about $408.6 million, USA Mega reports. The annuity payments, after all 30 have been dispersed, would work out to about $932 million. (You can see how taxes would impact the jackpot in your state here.)
Whether or not your state has a lottery tax, you may still be on the hook come tax time for your newfound income. Unless, of course, you live in a state without income tax: Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming (as well as Alaska and Nevada, but neither participate 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.