The Powerball jackpot winner got $2.04 billion
The Powerball reached its biggest lottery prize in history, and a lucky Californian got the cash prize. But with so many taxes, how much are they actually taking home? Read on for more.
The lucky gambler resides in California and took home the biggest prize in history.
The biggest Powerball jackpot ever finally has a winner. Or two, if you count the IRS. A lucky Californian matched all six numbers in the drawing and took home an incredible $2.04 billion prize.
The drawing took place on Tuesday instead of its usual Monday night because, according to Powerball officials, one state asked for extra time in order to process the sales and play data.
This prize marks the biggest Powerball jackpot in lottery history. The jackpot has been on a high roll in its thrice-weekly drawings since early August. That’s when a lucky person from Pennsylvania scored over $200 million on a single ticket.
Now, the newest Powerball jackpot winner has a decision to make right off the bat. Either they’ll take the $2.04 billion as an annuity, which is spread over 30 years. Or, they can take a reduced, pretax sum of $997.6 million.
If they choose the cash prize option – which most winners do – the biggest tax bill then partly depends on which state they live in.
There’s no tax in California for lottery prizes
While the Powerball jackpot is $2.04 billion, the winner will actually take home less than half of that amount. The IRS initially deducts 24% of the winnings – which is $239.4 million – for federal tax withholdings.
According to the state’s lottery winner’s handbook, California does not tax lottery prizes. That means that if the Powerball jackpot winner lives in CA, there’s no local or state taxes on the prize to worry about.
However, if the winner does not reside in California, their state is responsible for determining what they owe in their jurisdiction. Those taxes can range from zero to over 10% depending on the location.
On a federal level, much more than the initial $239 million would be due at tax time. That is because the maximum federal rate is 37%, which applies to the Powerball jackpot. So unless the winner is able to reduce their taxable income (by making charitable donations for instance), an extra 13% is due to the IRS – approximately $129.7 million.
So that would make a total of $369.1 million going to federal taxes. Which leaves the Powerball jackpot winner with $628.5 million to take home with them.
After the win, the Powerball jackpot has reset to its initial $20 million for the next drawing, scheduled to go live on Wednesday. Meanwhile, the Mega Millions’ jackpot is at $154 million, with a drawing scheduled for later today.
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Top investments for starters
If you’re not the lucky Powerball jackpot winner, don’t despair. There are other ways you can start building your wealth! And one of them is investing your money the right way. If you want to learn how you can get started, follow the link below and we’ll show you.
About the author / Aline Barbosa
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