News

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.

Advertisement

The lucky gambler resides in California and took home the biggest prize in history.

Powerball jackpot
The Powerball jackpot finally has a winner. Source: Unsplash.

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

Powerball jackpot
There’s no state tax on lottery winnings in California. Source: Unsplash.

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. 

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. 

investing for beginners post it concept

Top investments for starters

You don’t need to be an investment banker or billionaire to get one of these top investments for starters. Read on to learn more!

Trending Topics

content

What is creditworthiness and how do you improve it?

What is creditworthiness and how does it affect your finances? Check this article to get a better understanding of this important term.

Keep Reading
content

Fitness Goals on a Budget: How to Start?

Setting fitness goals can be daunting, especially when you're on a budget. Follow these tips to be a more active person on a budget!

Keep Reading
content

Best Egg Personal Loan review: Low APR rates!

Learn everything you need to know about the Best Egg Personal Loan in this comprehensive review. Find out if this lender is right for you!

Keep Reading

You may also like

content

See how to apply for the Upgrade Visa® Card with Cash Rewards

Find out how to apply and access the Upgrade Visa® Card with Cash Rewards! Enjoy competitive interest rates, and 1.5% cash back.

Keep Reading
content

See how to apply for the Citi® Diamond Preferred® Card

Here's how to quickly and easily apply for a Citi® Diamond Preferred® Card and enjoy all that it has to offer!

Keep Reading
content

Discover the Best Apps to Learn Spanish and Master the Language

Looking for the best apps to learn Spanish? Discover our top recommendations for language learning apps. Start your language-learning journey!

Keep Reading