How much would you pay in taxes if you won the $1.73 billion Powerball jackpot?

After not drawing a winner since July, the Powerball jackpot has risen to $1.73 billion, becoming the second largest prize in this lottery and the third largest of all lotteries in the United States.

If there is a winner tonight, they will be able to choose between two payment options: annuity or a single cash payment, which corresponds to the cash value of $756.6 million.

However, regardless of the option chosen, the winner will not receive the full amount, since they would still have to pay federal and state taxes.

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How much would you pay in taxes if you won the $1.73 billion Powerball jackpot?

The $1.73 billion figure represents the amount before taxes that a person would get if they received the prize as an annuity given in a first payment followed by 29 payments that increase 5% each year.

However, most jackpot winners choose the one-time cash payment up front, which in this case is $756.6 million before taxes.

The federal tax rate on any prize over $5,000 is 24%, which would immediately be deducted from your winnings. You would then enter the highest tax bracket, and will have to pay the maximum federal tax rate of 37% the following year.

Additionally, the winner would have to pay state taxes, depending on where they live, since some states do not tax lottery winnings. These are the following:

These are the states where Powerball is available and they do not charge state income taxes:

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How much money would you have left after paying taxes if you win the Powerball jackpot?

One-time payment

If you choose a lump sum payment, you will be paid $756.6 million up front, of which 24% would be automatically deducted, leaving you with $575.01 million.

Depending on your filing status for the following year, that amount is also subject to a tax rate of up to 37%, further decreasing your new fortune even before you file your state tax return.

Annuity

According to the Powerball Tax Calculator, in this option your prize would be reduced to $1,089,900,000 after subtracting 37% in federal taxes.

To get an estimate, you can use the Powerball Tax Calculator, choosing the jackpot sum, which is $1.73 billion. Then, choose the state you live in to have the tool calculate how much you will have left, in addition to choosing the payment option: annuity or a lump sum payment.