If you hit the Powerball jackpot, our Powerball payout calculator by state can help you. This tool is designed to show you how much tax you’ll have to pay on your winnings and how much you’ll receive in a lump sum.
How to use the Powerball payout calculator?
Follow these steps to determine your potential winnings:
- Enter Your Jackpot Amount: In the field labeled “How big is the jackpot?”, input the amount of the Powerball jackpot you’d like to analyze.
- Select Your State of Residence: From the drop-down list, choose your state to account for the specific state tax rate that applies to your winnings.
- Calculate Payout: Click the “CALCULATE PAYOUT” button, and the calculator will instantly display the following information: Gross Payout, Federal Taxes Paid, State Taxes Paid, Net Payout (after taxes)
By following these steps in our Powerball after tax calculator, you can quickly determine how much you will take home after taxes in the event of a lump sum payment.
Federal-level taxes on lottery winnings
In the United States, lottery winnings are treated as taxable income at the federal level, and the amount you owe depends on your total earnings and tax bracket. The federal government automatically withholds 24% on lottery winnings over $5,000. However, this initial withholding might not cover your full tax liability if the winnings push you into a higher tax bracket, especially for those filing as single or joint. Depending on your overall annual income, you may owe additional taxes when filing, particularly if your winnings significantly increase your income for the year.
State-level taxes on lottery winnings
In addition to the federal tax on lottery winnings, many states also impose their own taxes, with rates varying depending on the state. However, there are nine states that do not levy any income tax on lottery winnings: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you purchase a winning ticket in a state where you don’t normally reside, that state will still apply its tax, withholding a portion of your winnings.
Powerball Payment Options
When you win the lottery, one of the first big decisions you’ll face is how to collect your prize. You typically have two choices: a lump sum payout or annuity payments spread over time. Both options come with distinct tax implications and can affect your long-term financial strategy.
- Lump Sum: With this option, you receive your winnings all at once, but the total amount will be less than the advertised jackpot—usually around 60% of it.
- Annuity: If you opt for annuity payments, your winnings are divided into annual installments over a 30-year period. While you’ll pay taxes each year on the received amount, this option provides a steady income stream, making it a potentially better choice for long-term financial stability.
By thoughtfully considering the advantages and disadvantages of each choice, you can make a decision that supports your financial goals and long-term plans.