Live in one of these states? You’ll keep more of the $1.8 billion Powerball jackpot than others
Live in a state without income tax? You’ll keep more of the $1.8B Powerball jackpot. Federal taxes apply, but state rules can shrink your prize fast.
On Saturday, September 6, the Powerball drawing is worth $1.8 billion—one of the largest prizes in American lottery history.
While Powerball is available in 45 states, as well as Puerto Rico, Guam, and the U.S. Virgin Islands, the amount you actually take home can vary depending on how your state taxes lottery winnings.
All winners will owe federal taxes, but state laws vary when it comes to taxing lottery and gambling prizes. Uncle Sam applies a 24 percent tax withholding on any lottery prize over $5,000. This means nearly a quarter of your winnings will be automatically withheld by the IRS from your initial payout. When you file your tax return, you may owe more—or get some back—depending on your other income sources for that year.
The cash value of Saturday’s Powerball jackpot, for those who choose the lump sum option, is advertised at $826.4 million. After federal withholding, your take-home amount would be somewhere around $628 million. When you file your taxes in the spring, you’ll likely owe more, since this windfall would place you in the highest tax bracket, which in 2025 is 37 percent.
If you opt for the annuity, which spreads payments over 30 years, you’ll receive a larger portion of the jackpot overall. However, you’ll pay taxes on each annual payment—and given the size of the prize, those taxes will be significant. With annual payouts upwards of $50 million, you might not mind so much.
So, which states don’t tax lottery winnings?
Players in states that do not charge income tax or lottery winnings will be able to keep the greatest share of their prize. These states include:
- New Hampshire
- Florida
- South Dakota
- Tennessee
- Texas
- Washington
- Wisconsin.
In California, Delaware, and Utah, lottery winnings will not be subject to withholding. Still, residents do pay state income tax, meaning that you will pay tax on your total income reported in 2025, which will include your lottery winnings.
Which states have the highest withholding rates on lottery winnings?
In all other states that allow residents to play Powerball, winnings over a certain threshold, typically $5,000, will see part of their prize withheld by the state for taxation.
New York withholds 10.9 percent of lottery winnings, with New York City and Yonkers tacking on an extra 3.876 percent or 1.82575 percent, respectively.
Washington, DC, and Maryland also lead the country on this front. As of July 1, 2025, Maryland will withhold 9.5 percent of winnings for residents if the prize is over $5,000. For non-residents, Maryland will only withhold 8.75 percent of the tax.
Washington, DC residents will see 8.5 percent of their prize withheld.
Oregon and New Jersey withhold 8 percent; in the case of New Jersey, a lower rate is applied to prizes under $500,000.
To determine the exact amount you will owe if you are the lucky winner of Saturday’s jackpot, use the Lottery Tax Calculator, a tool developed by Tax Act. You can switch between the lump sum and annuity payment options to compare which one is more appealing.
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