Topline
The Powerball jackpot rose to $1.23 billion Wednesday night—the biggest lottery prize of the year so far—after no tickets matched the numbers drawn, but the eventual winner will take home a smaller amount after paying their taxes.
Key Facts
If a winner is found in the next draw, they get to pick between receiving the $1.23 billion prize amount split across 30 annual payments or a lump sum cash award of $595.1 million—usually the popular choice.
If the lump sum payout is chosen, the prize will drop to $452.3 million after a mandatory federal tax withholding of 24% is applied.
Depending on their taxable income, the winner could face a federal marginal rate as high as 37%, further cutting the winnings to $375 million.
If the winner chooses the annual payments option, their yearly installment of $41 million will drop to $25.8 million if the 37% federal marginal rate is applied.
The winner’s state of residence will also affect their take-home amount as some states like Texas and California don’t tax lottery winnings, while others like New York and New Jersey levy between 5% to 10.9%.
Key Background
The jackpot amount is now the biggest lottery prize of the year, overtaking the $1.13 billion Mega Millions prize won by a single ticket holder from New Jersey last week. The Powerball lottery has not had a big winner since New Year’s Day, when a single ticket holder from Michigan won a $842.4 million jackpot.
What To Watch For
The next draw for the Powerball prize will take place on Saturday night.
Surprising Fact
A Powerball ticket buyer will need to overcome astronomically poor odds of 1-in-292.2 million to win the billion-dollar jackpot. This is only slightly better than the winning odds for the Mega Millions jackpot of 1-in-302.6 million.
Big Number
$2.04 billion. That is the value of the biggest jackpot prize in both Powerball and U.S. history. It was won in November 2022 by a single ticket holder from California. The $1.23 billion jackpot amount is now the fourth biggest in Powerball history and the eighth biggest of all time.
Further Reading
Billion-Dollar Mega Millions Jackpot Claimed In New Jersey—Here’s What The Winner Will Take Home After Taxes (Forbes)
Powerball Jackpot Hits $865 Million—Here’s How Much A Winner Could Take Home After Taxes (Forbes)
