The Powerball jackpot keeps growing, and so does the cut that would go to Uncle Sam if there is a winner for the now $1.5 billion Powerball jackpot Wednesday.
All lottery winnings are subject to a 25 percent federal tax withholding. And that doesn’t include the taxes charged by most states, which could range from zero to almost 9 percent.
Let’s run through the numbers.
The total prize amount of $1.5 billion only really applies to people who choose to receive the cash in equal payouts over a period of 30 years. Most people, however, choose to take a smaller lump=sum payment, which in this case would mean a payout of $930 million, before taxes, according to the website USAMega.com, which tracks multi-state lotteries.
After federal taxes are deducted, which would add up to about $232.5 million, the total prize is reduced to $697.5 million. Then there are state taxes to think about, which vary based on where the winning ticket is purchased. Some states charge taxes on lottery winnings for both residents and non-residents and others only charge residents.